International Harvester Credit Corp. v. Goodrich, 350 U.S. 537 (1956)

Topics:  International Harvester

From the U.S. Government Printing Office via GPO Access
 
Case:   INTERNATIONAL HARVESTER CREDIT CORP. V. GOODRICH

Case #: 350US537


NO. 82.  ARGUED JANUARY 17-18, 1956 - DECIDED APRIL 9, 1956 - 308 N.Y.
731, 124 N.E.2D 339, AFFIRMED. 


NEW YORK STATE IMPOSES A HIGHWAY USE TAX, COMPUTED BY THE WEIGHT
DISTANCE PRINCIPLE, UPON MOTOR CARRIERS OPERATING HEAVY VEHICLES ON THE
STATE'S HIGHWAYS.  THE TAX OWED BY A CARRIER IS A STATUTORY LIEN UPON
ALL MOTOR VEHICLES OPERATED BY THE CARRIER WITHIN THE STATE, AND THE
LIEN IS PARAMOUNT TO ALL PRIOR LIENS OR ENCUMBRANCES.  VENDORS OF
PARTICULAR TRUCKS, WHO SOLD THEM TO THE CARRIER UNDER CONDITIONAL SALES
AGREEMENTS MORE THAN A YEAR AFTER THE STATUTE BECAME EFFECTIVE,
CHALLENGED APPLICATION OF THE STATUTORY TAX LIEN, IN SOME
CIRCUMSTANCES, AS A DEPRIVATION OF PROPERTY WITHOUT DUE PROCESS OF LAW
IN VIOLATION OF THE FOURTEENTH AMENDMENT TO THE FEDERAL CONSTITUTION. 
HELD: 

1.  AS APPLIED TO TAXES BASED UPON THE CARRIER'S OPERATION OF OTHER
TRUCKS WITHIN THE STATE, WHETHER BEFORE OR DURING THE TIME THAT THE
CARRIER OPERATED THE PARTICULAR TRUCKS WITHIN THE STATE, THE STATE'S
PRIORITY OF LIEN IS CONSTITUTIONAL.  PP. 538-548. 

2.  AS APPLIED TO TAXES ASSESSED AGAINST THE CARRIER AFTER THE
VENDORS HAVE REPOSSESSED THE PARTICULAR TRUCKS, BUT WHICH WERE BASED
UPON THE CARRIER'S OPERATIONS ON THE STATE'S HIGHWAYS BEFORE SUCH
REPOSSESSION, THE STATE'S PRIORITY OF LIEN IS CONSTITUTIONAL.  PP.  538
548. 

INTERNATIONAL HARVESTER CREDIT CORP. ET AL. V. GOODRICH ET AL.,
CONSTITUTING THE STATE TAX COMMISSION OF NEW YORK. 

APPEAL FROM THE COURT OF APPEALS OF NEW YORK. 

MR. JUSTICE BURTON DELIVERED THE OPINION OF THE COURT. 

THE STATE OF NEW YORK IMPOSES A HIGHWAY USE TAX UPON MOTOR CARRIERS
OPERATING HEAVY VEHICLES ON ITS PUBLIC HIGHWAYS.  MANY SUCH VEHICLES
ARE PURCHASED AND OPERATED UNDER CONDITIONAL SALES AGREEMENTS, AND
CERTAIN CONDITIONAL VENDORS HERE QUESTION THE EXTENT TO WHICH THE STATE
MAY SUBORDINATE THE VENDORS' SECURITY INTERESTS TO THE STATE'S LIEN FOR
TAXES OWED BY THE CARRIER.  THE VENDORS QUESTION THE CONSTITUTIONALITY
OF ANY GRANT OF PRIORITY TO THE STATE'S LIEN, OVER THEIR RIGHTS IN
PARTICULAR TRUCKS, INSOFAR AS THE LIEN IS MADE APPLICABLE TO TAXES
BASED UPON THE CARRIER'S OPERATION OF OTHER TRUCKS WITHIN THE STATE,
WHETHER BEFORE, OR DURING, THE TIME THAT THE CARRIER HAS OPERATED THE
PARTICULAR TRUCKS WITHIN THE STATE.  THE VENDORS OBJECT, LIKEWISE, TO
ANY PRIORITY FOR THE LIEN AS APPLIED TO TAXES ASSESSED AGAINST THE
CARRIER AFTER THE VENDORS HAVE REPOSSESSED THE PARTICULAR TRUCKS, EVEN
THOUGH THE TAXES ARE BASED UPON THE CARRIER'S OPERATIONS ON THE STATE'S
HIGHWAYS BEFORE SUCH REPOSSESSION.  (FN1)  FOR THE REASONS HEREAFTER
STATED, WE SUSTAIN THE STATE'S PRIORITY IN EACH INSTANCE. 

INTERNATIONAL HARVESTER CREDIT CORPORATION, A DELAWARE CORPORATION,
AND BROCKWAY MOTOR COMPANY, INC., A NEW YORK CORPORATION, AS PLAINTIFFS
(NOW APPELLANTS), WITH THE MEMBERS OF THE STATE TAX COMMISSION OF NEW
YORK AS DEFENDANTS (NOW APPELLEES), SUBMITTED THIS CONTROVERSY TO THE
SUPREME COURT OF THE STATE OF NEW YORK, APPELLATE DIVISION, THIRD
DEPARTMENT, ON STIPULATED FACTS, PURSUANT TO SEC. 546 OF THE CIVIL
PRACTICE ACT OF NEW YORK.  APPELLANTS SOUGHT A DECLARATORY JUDGMENT
THAT THE LIENS ASSERTED BY THE STATE WERE NOT SUPERIOR TO THE
CONDITIONAL VENDORS' INTERESTS IN CERTAIN TRUCKS AND THAT ARTICLE 21 OF
THE TAX LAW WAS UNCONSTITUTIONAL, INSOFAR AS IT PRESCRIBED THE
PRIORITIES TO WHICH THEY OBJECTED.  (FN2)  APPELLANTS ALSO ASKED THAT
THE BONDS FILED BY THEM TO SECURE PAYMENT OF THE TAXES BE CANCELED AND
RETURNED. 

WITH ONE JUDGE NOT VOTING, THE APPELLATE DIVISION DECIDED IN FAVOR OF
APPELLEES, SUSTAINING GENERALLY THE STATE'S LIENS AND PRIORITIES. 
(FN3)  284 APP. DIV. 604, 132 N.Y.S.2D 511.  ON APPEAL, TAKEN AS A
MATTER OF RIGHT, THAT JUDGMENT WAS AFFIRMED BY THE COURT OF APPEALS OF
NEW YORK, WITH ONE JUDGE DISSENTING.  308 N.Y. 731, 124 N.E.2D 339.  ON
APPEAL TO THIS COURT, UNDER 28 U.S.C. SEC. 1257(2), WE NOTED PROBABLE
JURISDICTION.  350 U.S. 813. 

THE STIPULATED FACTS MAY BE SUMMARIZED AS FOLLOWS:  FROM JANUARY 1,
1952, THROUGH FEBRUARY 1954, EASTERN CARTAGE AND LEASING CO., INC.,
HERE CALLED THE "CARRIER," WAS A DOMESTIC CORPORATION OWNING AT LEAST
15 MOTOR VEHICLES.  AS A MOTOR CARRIER IT OPERATED THESE VEHICLES OVER
THE PUBLIC HIGHWAYS OF THE STATE OF NEW YORK SUBJECT TO THE HIGHWAY USE
TAX IMPOSED BY ARTICLE 21 OF THE TAX LAW, SUPRA.  THAT TAX WAS IMPOSED
UPON THE "CARRIER" OR "OWNER," AND THOSE TERMS DID NOT INCLUDE THE
CONDITIONAL VENDOR OF TRUCKS OPERATED BY THE MOTOR CARRIER.  (FN4)  IT
WAS PAYABLE WITH THE MONTHLY RETURNS.  (FN5) 

IN RECOGNITION OF THE ADMINISTRATIVE DIFFICULTIES INVOLVED IN
ENFORCING AND COLLECTING THIS TAX, IN CONTRAST TO A FLAT RATE TAX, OR
ONE MEASURED BY GROSS RECEIPTS, THE STATUTE PRESCRIBED EXTENSIVE
REMEDIES, AS WELL AS PENALTIES, CIVIL AND CRIMINAL (SEE SEC. 512 OF THE
TAX LAW), TO PROTECT THE INTEREST OF THE STATE.  (FN6)  THE PROVISIONS
FOR THE STATE'S LIEN COVERING THE POINTS AT ISSUE ARE AS FOLLOWS: 

"SEC. 506.  PAYMENT OF TAX: 

     *         *         *         *         * 

"THE FEES, TAXES, PENALTIES AND INTEREST ACCRUING UNDER THIS ARTICLE
SHALL CONSTITUTE A LIEN UPON ALL MOTOR VEHICLES AND VEHICULAR UNITS OF
SUCH CARRIER.  THE LIEN SHALL ATTACH AT THE TIME OF OPERATION OF ANY
MOTOR VEHICLE OR VEHICULAR UNIT OF SUCH CARRIER WITHIN THIS STATE AND
SHALL REMAIN EFFECTIVE UNTIL THE FEES, TAXES, PENALTIES AND INTEREST
ARE PAID, OR THE MOTOR VEHICLE OR VEHICULAR UNIT IS SOLD FOR THE
PAYMENT THEREOF.  SUCH LIENS SHALL BE PARAMOUNT TO ALL PRIOR LIENS OR
ENCUMBRANCES OF ANY CHARACTER AND TO THE RIGHTS OF ANY HOLDER OF THE
LEGAL TITLE IN OR TO ANY SUCH MOTOR VEHICLE OR VEHICULAR UNIT." 
MCKINNEY'S N.Y. LAWS, TAX LAW. 

FROM JANUARY 1, 1952, THROUGH FEBRUARY 1954, THE CARRIER INCURRED,
AND FAILED TO PAY, HIGHWAY USE TAXES OF $3,158.77, PLUS PENALTIES AND
INTEREST OF $539.27 THROUGH APRIL 21, 1954.  THE TAXES CARRIED INTEREST
AT 1% PER MONTH.  WHILE NEITHER APPELLANT KNEW ANYTHING OF THESE
DELINQUENCIES UNTIL THE STATE ASSERTED THEM IN APRIL 1954, IT IS ALSO
TRUE THAT NEITHER APPELLANT HAD INQUIRED OF THE CARRIER OR OF THE STATE
AS TO THEIR POSSIBLE EXISTENCE.  (FN7) 

IN FEBRUARY AND MARCH 1953, WHILE THE CARRIER WAS OPERATING UNDER THE
HIGHWAY USE TAX ACT, INTERNATIONAL HARVESTER COMPANY, A FOREIGN
CORPORATION DOING BUSINESS IN NEW YORK STATE, SOLD TWO TRACTORS TO THE
CARRIER FOR $8,253 EACH.  (FN8)  IN EACH SUCH TRANSACTION, THE CARRIER
EXECUTED AND DELIVERED TO THE VENDOR A CONDITIONAL SALES AGREEMENT FOR
$6,541.  THE AGREEMENTS WERE ASSIGNED BY THE VENDOR TO THE
INTERNATIONAL HARVESTER CREDIT CORPORATION, ONE OF THE APPELLANTS
HEREIN, AND WERE PROPERLY FILED IN THE OFFICE OF THE CLERK OF THE TOWN
OF ROTTERDAM, SCHENECTADY COUNTY, NEW YORK.  EACH TRUCK WAS OPERATED BY
THE CARRIER ON THE PUBLIC HIGHWAYS OF NEW YORK STATE AND REMAINED IN
THE CARRIER'S POSSESSION AND CONTROL UNTIL REPOSSESSED JANUARY 26,
1954.  THE CARRIER WAS THEN DELINQUENT UNDER ITS SALES AGREEMENTS TO
THE EXTENT OF $4,578.79 ON EACH TRUCK, AND THE VENDOR BOUGHT THEM IN AT
PUBLIC SALE.  IT RESOLD ONE TO A PURCHASER IN NEW YORK AND THE OTHER TO
A PURCHASER IN MASSACHUSETTS. 

COMPARABLE FACTS RELATE TO THE TRUCK SOLD THE CARRIER BY APPELLANT
BROCKWAY MOTOR COMPANY.  ITS SALES PRICE WAS $7,257; THE CONDITIONAL
SALES AGREEMENT WAS FOR $6,757.  THE REPOSSESSION TOOK PLACE MARCH 26,
1954, WHEN $5,625 WAS OWED TO THE VENDOR.  THE RECORD SHOWS NO DISPOSAL
OF THE TRUCK. 

APRIL 21, 1954, THE STATE ASSERTED ITS LIEN ON EACH TRUCK FOR THE
ENTIRE AMOUNT OF THE HIGHWAY USE TAX DELINQUENCIES OF THE CARRIER,
TOTALING $3,698.04.  (FN9) 

THERE IS NO DISPUTE AS TO THE AMOUNT OF THE TAX DUE TO THE STATE NOR
OF THE CLAIM THAT SUCH SUM IS DUE FROM THE CARRIER.  (FN10)  THERE ALSO
IS NO CONTROVERSY AS TO THE VALIDITY OF THE STATE'S LIEN AGAINST THE
RESPECTIVE TRUCKS FOR SUCH PART OF THE TAX AS IS MEASURED BY THE
OPERATION OF EACH ON THE STATE'S HIGHWAYS. 

THE ISSUE, ACCORDINGLY, HAS BEEN NARROWED BY THE PARTIES TO THE
VALIDITY OF THE SUBORDINATION OF THE RIGHTS OF THE RESPECTIVE
CONDITIONAL VENDORS OF THESE TRUCKS TO THE STATE'S LIEN FOR ANY PART OF
THE CARRIER'S DELINQUENT TAXES THAT EXCEEDS THE SUM DETERMINED BY THE
OPERATION OF THE TRUCKS ON THE STATE'S HIGHWAYS.  TO THE EXTENT OF SUCH
EXCESS, THE VENDORS CLAIM THAT THE STATUTORY LIEN DEPRIVES THEM OF
PROPERTY WITHOUT DUE PROCESS OF LAW IN VIOLATION OF THE FOURTEENTH
AMENDMENT TO THE FEDERAL CONSTITUTION. 

SEPARATE FACTUAL CONSIDERATIONS ARE PRESENTED BY THE STATE'S LIEN (1)
FOR THE TAXES MEASURED BY THE CARRIER'S OPERATION OF TRUCKS OTHER THAN
THE THREE HERE IN QUESTION, AND (2) FOR THE TAXES MEASURED BY THE
CARRIER'S OPERATION OF TRUCKS BEFORE ITS FIRST OPERATION OF THE
RESPECTIVE THREE TRUCKS IN QUESTION.  THE PRINCIPLE WHICH SUPPORTS THE
STATE'S PRIORITY OF LIEN IS, HOWEVER, THE SAME IN BOTH INSTANCES.  THAT
PRINCIPLE SUPPORTS ALSO THE PRIORITY OF THE STATE'S LIEN AS DATING FROM
THE TIME OF THE CARRIER'S FIRST OPERATION OF THE RESPECTIVE THREE
TRUCKS WITHIN THE STATE.  THIS HOLDS GOOD EVEN THOUGH NO ASSESSMENT OF
THE TAX WAS MADE BY THE STATE UNTIL AFTER THE RESPECTIVE TRUCKS HAD
BEEN REPOSSESSED BY THEIR CONDITIONAL VENDORS.  THE STATE'S CLAIM OF
PRIORITY FOR ITS LIEN DEPENDS, IN EACH INSTANCE, UPON ITS
CONSTITUTIONAL RIGHT TO ENFORCE THE COLLECTION OF ALL TAXES DUE IT FROM
THE MOTOR CARRIER FOR THE LATTER'S USE OF THE HIGHWAYS OF NEW YORK
UNDER A STATUTE GIVING AMPLE NOTICE OF THE TAX AND OF THE PROVISIONS
FOR ITS COLLECTION. 

THERE IS NO DOUBT THAT THE STATE MAY IMPOSE AND ENFORCE A LIEN
COVERING ALL TAXES OWED TO IT BY A CARRIER FOR THE PRIVILEGE OF USING
THE STATE'S HIGHWAYS, WHERE SUCH LIEN APPLIES TO VEHICLES OWNED BY THE
CARRIER FREE AND CLEAR OF ENCUMBRANCES.  THE LIEN FOR SUCH TAXES MAY BE
ENFORCED AGAINST ANY OR ALL OF SUCH TRUCKS, REGARDLESS OF WHETHER THE
TAXES ACCRUED FROM THE CARRIER'S OPERATION OF ONE OR THE OTHER OF SUCH
TRUCKS, OR EVEN WHETHER THEY ACCRUED FROM THE CARRIER'S USE OF THE
HIGHWAYS BEFORE ITS ACQUISITION AND OPERATION OF ANY OF THE PARTICULAR
TRUCKS SUBJECTED TO THE LIEN.  LIKEWISE, THE LIEN UNQUESTIONABLY COULD
ATTACH TO THE TRUCKS AS OF THE TIME OF THEIR FIRST USE BY THE CARRIER
WITHIN THE STATE.  SEE UNITED STATES V. ALABAMA, 313 U.S. 274, 280
282.  SUCH LIENS ARE SIMPLE ILLUSTRATIONS OF THE STATE'S EXERCISE OF
ITS PREROGATIVE RIGHT TO IMPOSE A STATUTORY LIEN FOR DELINQUENT TAXES
UPON THE TAXPAYER'S PROPERTY.  SEE MARSHALL V. NEW YORK, 254 U.S. 380,
382-384.  A STATE IS ENTITLED TO WIDE DISCRETION IN SUCH MATTERS. 

THE CONTROVERSY ARISES HERE BECAUSE, FOR THE PRESENT PURPOSES, THE
STATE TREATS THE THREE TRUCKS NOW BEFORE US IN THE SAME MANNER AS IT
DOES THE CARRIER'S UNENCUMBERED TRUCKS.  THE VENDORS, RELYING UPON
THEIR CONDITIONAL SALES AGREEMENTS, DENY THIS RIGHT.  THE STATE DOES
NOT DISPUTE THE VALIDITY OF THOSE AGREEMENTS.  THE STATE, HOWEVER,
TREATS THEM AS SECURITY INTERESTS RATHER THAN AS ABSOLUTE INTERESTS. 
THE STATE EMPHASIZES THE ACTION OF THE VENDORS IN YIELDING CONTROL OF
THE TRUCKS TO THE CARRIER THUS ENABLING THE CARRIER TO OPERATE THEM ON
THE STATE'S HIGHWAYS.  THE BURDEN PLACED ON THE HIGHWAYS HAS BEEN
PRECISELY THE SAME AS THOUGH THE CARRIER HAD HELD UNENCUMBERED TITLE TO
THE TRUCKS. 

LOOKING AT THE SITUATION FROM ANOTHER POINT OF VIEW, NEW YORK HAS AN
UNQUESTIONABLE RIGHT TO REGULATE THE USE OF CONDITIONAL SALES
AGREEMENTS WITHIN THE STATE.  THE PRESCRIBED PRIORITY OF ITS HIGHWAY
TAX LIENS OVER THE RIGHTS OF CONDITIONAL VENDORS MAY BE REGARDED,
THEREFORE, AS IN THE NATURE OF A SUPPLEMENT TO THE NEW YORK UNIFORM
CONDITIONAL SALES ACT.  MCKINNEY'S N.Y. LAWS, PERSONAL PROPERTY LAW,
ART. 4. 

NEW YORK SUBJECTS EACH CARRIER TO A REASONABLY COMPUTED TAX FOR THE
USE OF ITS HIGHWAYS AND, IN ORDER TO COLLECT THAT TAX, PLACES A
STATUTORY LIEN UPON ALL MOTOR VEHICLES OPERATED BY THE CARRIER WITHIN
THE STATE.  THE CARRIER HERE WAS THE BENEFICIAL OWNER AND OPERATOR OF
THE THREE TRUCKS DURING THE TIME IT HAD POSSESSION OF THEM.  THE
CONDITIONAL SALES AGREEMENTS PROVIDED THE VENDORS WITH SECURITY FOR
PAYMENT OF THE PURCHASE PRICE OF THE TRUCKS.  AS LONG AS THE CARRIER
KEPT UP ITS PAYMENTS, THE POSSESSION AND CONTROL OF THE TRUCKS WERE IN
THE CARRIER AND ITS USE OF THEM ON THE HIGHWAYS HAD THE SAME EFFECT ON
THOSE HIGHWAYS AS THOUGH THE TRUCKS HAD BEEN PAID FOR IN FULL.  (FN11) 

THE ENFORCEMENT OF THIS LIEN RESTS UPON PRINCIPLES KNOWN TO THE LAW
IN OTHER CONNECTIONS.  A LANDLORD'S LIEN FOR UNPAID RENT LONG HAS BEEN
ENFORCEABLE AGAINST PERSONAL PROPERTY FOUND ON THE PREMISES IN THE
POSSESSION OF THE TENANT, EVEN THOUGH THE LEGAL TITLE TO SUCH PERSONAL
PROPERTY MAY BE IN A THIRD PARTY WHO HAS ALLOWED THE TENANT TO HAVE
POSSESSION AND BENEFICIAL USE OF IT.  SPENCER V. M'GOWEN, 13 WEND. 
(N.Y.)  256.  (FN12) 

THE HIGHWAY USE TAX IS NOT ASSESSED ON THE CONDITIONAL VENDOR OR ON
THE VENDOR'S TRUCKS AS SUCH.  IT IS A TAX ASSESSED ON THE CARRIER AND
THE LIEN FOR ITS COLLECTION IS IMPOSED ON THE TRUCKS IN THE CARRIER'S
POSSESSION WHICH HAVE BEEN OPERATED BY IT ON NEW YORK'S HIGHWAYS.  THE
STATE ASSERTS NO PERSONAL LIABILITY ON THE PART OF EITHER OF THE
APPELLANTS.  THE STATE'S CLAIM IS LIMITED TO ITS LIEN AS SET FORTH IN A
STATUTE WHICH WAS IN EFFECT MORE THAN A YEAR BEFORE THE RESPECTIVE
APPELLANTS SOLD THEIR TRUCKS TO THE CARRIER.  WHILE IT IS NOT A
CONDITION OF THE VALIDITY OF THE STATE'S LIEN, IT IS OBVIOUS THAT
VENDORS OF TRUCKS, AS WELL AS CARRIERS, DERIVE SUBSTANTIAL BENEFITS
FROM THE STATE'S COSTLY CONSTRUCTION AND MAINTENANCE OF ITS HIGHWAYS
FOR HEAVY TRAFFIC.  THE REASONABLENESS OF THE LIEN IS THEREBY
EMPHASIZED.  CASES CONDEMNING ATTEMPTS BY STATES TO COMPUTE ONE
PERSON'S TAX BY REFERENCE TO THE INCOME OR ACTIVITIES OF ANOTHER ARE
NOT PERSUASIVE HERE.  THE TAX HERE IS ON THE CARRIER AND IT IS COMPUTED
WITH REFERENCE TO THE CARRIER'S OWN USE OF THE HIGHWAYS.  THIS
STATUTORY LIEN DOES NOT DESTROY THE EFFICACY OF CONDITIONAL SALES
FINANCING.  PRACTICALLY, IT SUGGESTS THAT THE CONDITIONAL VENDORS
SECURE ASSURANCE FROM THEIR CARRIER-CUSTOMERS THAT THE LATTERS' HIGHWAY
USE TAXES ARE NOT IN ARREARS. 

WHILE THE STATE WOULD NOT, AT COMMON LAW, HAVE A LIEN TO THE EXTENT
HERE ASSERTED, THAT IS FAR FROM SAYING THAT THE LIEN, WHEN IMPOSED BY
STATUTE, IS ARBITRARY OR UNREASONABLE AND, THEREFORE, LACKING IN DUE
PROCESS. 

JUSTICE CARDOZO SAID FOR THIS COURT IN BURNET V. WELLS, 289 U.S. 670,
677-678:    "THE CONTROVERSY IS ONE AS TO THE BOUNDARIES OF LEGISLATIVE
POWER.  IT MUST BE DEALT WITH IN A LARGE WAY, AS QUESTIONS OF DUE
PROCESS ALWAYS ARE, NOT NARROWLY OR PEDANTICALLY, IN SLAVERY TO FORMS
OR PHRASES.  'TAXATION IS NOT SO MUCH CONCERNED WITH THE REFINEMENTS OF
TITLE AS IT IS WITH THE ACTUAL COMMAND OVER THE PROPERTY TAXED - THE
ACTUAL BENEFIT FOR WHICH THE TAX IS PAID.'  CORLISS V. BOWERS, SUPRA
(281 U.S. 376), P. 378.  CF.  BURNET V. GUGGENHEIM, SUPRA (288 U.S.
280), P. 283.  REFINEMENTS OF TITLE HAVE AT TIMES SUPPLIED THE RULE
WHEN THE QUESTION HAS BEEN ONE OF CONSTRUCTION AND NOTHING MORE, A
QUESTION AS TO THE MEANING OF A TAXING ACT TO BE READ IN FAVOR OF THE
TAXPAYER.  REFINEMENTS OF TITLE ARE WITHOUT CONTROLLING FORCE WHEN A
STATUTE, UNMISTAKABLE IN MEANING, IS ASSAILED BY A TAXPAYER AS
OVERPASSING THE BOUNDS OF REASON, AN EXERCISE BY THE LAWMAKERS OF
ARBITRARY POWER.  IN SUCH CIRCUMSTANCES THE QUESTION IS NO LONGER
WHETHER THE CONCEPT OF OWNERSHIP REFLECTED IN THE STATUTE IS TO BE
SQUARED WITH THE CONCEPT EMBODIED, MORE OR LESS VAGUELY, IN COMMON LAW
TRADITIONS.  THE QUESTION IS WHETHER IT IS ONE THAT AN ENLIGHTENED
LEGISLATOR MIGHT ACT UPON WITHOUT AFFRONT TO JUSTICE.  EVEN
ADMINISTRATIVE CONVENIENCE, THE PRACTICAL NECESSITIES OF AN EFFICIENT
SYSTEM OF TAXATION, WILL HAVE HEED AND RECOGNITION WITHIN REASONABLE
LIMITS." 

THERE IS LITTLE DOUBT THAT IF THIS TAX ON THE CARRIER WERE REQUIRED
TO BE COMPUTED AT A FLAT RATE, OR MEASURED BY THE GROSS RECEIPTS OF THE
CARRIER FROM ITS USE OF THE STATE'S HIGHWAYS, THAT THE LIENS HERE
ASSERTED ON ALL VEHICLES IN THE CARRIER'S FLEET OF TRUCKS (ALTHOUGH
SUBJECT TO CONDITIONAL SALES) WOULD BE VALID AS A REASONABLE MEANS OF
ENFORCING SUCH AN UNALLOCABLE TAX.  THE STATE HAS NO LESS A
CONSTITUTIONAL RIGHT TO PRESCRIBE AND ENFORCE ITS LIEN WHERE, AS HERE,
THE TAX ON THE CARRIER IS ALLOCABLE BECAUSE COMPUTED IN CLOSE
PROPORTION TO THE ACTUAL BURDEN PLACED ON THE HIGHWAYS BY THE
RESPECTIVE TRUCKS OPERATED BY THE CARRIER.  IN EITHER CASE, THE TAX IS
OWED BY THE CARRIER AND THE NEED FOR AN EFFECTIVE LIEN TO ENFORCE IT IS
ALL THE MORE NECESSARY WHERE, AS HERE, THE TAX CANNOT BE COMPUTED OR
READILY COLLECTED IN ADVANCE. 

THE JUDGMENT OF THE COURT OF APPEALS OF THE STATE OF NEW YORK,
ACCORDINGLY, IS AFFIRMED. 

FN1  WE DO NOT HAVE BEFORE US THE VALIDITY OF THE ATTEMPTED
SUBORDINATION OF A CONDITIONAL VENDOR'S SECURITY INTEREST IN A TRUCK
SOLD TO AND OPERATED BY A CARRIER WHERE THE TAX IS MEASURED BY ANY USE
OF THE HIGHWAYS BY THE CARRIER AFTER THE TRUCK HAS BEEN REPOSSESSED BY
ITS VENDOR.  SUCH A CLAIM WAS MADE IN THIS CASE BUT IT WAS ABANDONED BY
THE STATE. 

FN2  ARTICLE 21 OF THE TAX LAW, EFFECTIVE OCTOBER 1, 1951, IMPOSED A
TAX FOR THE PRIVILEGE OF OPERATING ON THE HIGHWAYS OF NEW YORK MOTOR
VEHICLES HAVING A GROSS WEIGHT OF OVER 18,000 POUNDS EACH.  MCKINNEY'S
N.Y. LAWS, SECS. 501(2) AND 503.  THE TAX WAS COMPUTED ON A GRADUATED
SCALE BEGINNING AT SIX MILLS PER MILE FOR VEHICLES OF BETWEEN 18,001
AND 20,000 POUNDS.  THE SCALE ROSE TO 35 MILLS FOR TRUCKS WEIGHING
BETWEEN 74,001 AND 76,000 POUNDS, WITH AN ADDITIONAL TWO MILLS PER TON
AND FRACTION THEREOF ABOVE THAT WEIGHT.  THE TAX WAS DETERMINED BY
MULTIPLYING THE NUMBER OF MILES OPERATED OVER THE HIGHWAYS OF THE STATE
BY THE RATE FOR THE APPROPRIATE WEIGHT GROUP.  ID., SEC. 503. 

FN3  THE LIEN WAS NOT UPHELD AS TO ANY TAXES WHICH ACCRUED AFTER
REPOSSESSION OF THE TRUCKS. 

FN4  "SUCH TAX SHALL BE UPON THE CARRIER EXCEPT THAT WHERE THE
CARRIER IS NOT THE OWNER OF SUCH VEHICULAR UNIT, THE TAX SHALL BE A
JOINT AND SEVERAL LIABILITY UPON BOTH."  TAX LAW, SEC. 503.  AND SEE
THE FOLLOWING INTERPRETATION OF THE ABOVE SENTENCE BY THE ATTORNEY
GENERAL OF NEW YORK WHICH WE ACCEPT: 

"IN MY OPINION, THE STATUTE DOES NOT INTEND THE INCLUSION OF 'A
CONDITIONAL VENDOR' IN THE WORD 'OWNER.'  THE JOINT AND SEVERAL
LIABILITY IMPOSED UPON AN OWNER OTHER THAN THE CARRIER IS DESIGNED TO
COVER THOSE WHO LAWFULLY PLACE THE USE AND CONTROL OF VEHICLES IN THE
HANDS OF OTHERS FOR OPERATION UPON THE HIGHWAYS UNDER CIRCUMSTANCES AND
ARRANGEMENTS WHICH DO NOT LOOK TO DIVESTITURE OF THEIR OWN PROPRIETARY
INTERESTS.  A CONDITIONAL VENDOR, ON THE OTHER HAND, RETAINS LEGAL
TITLE AS A SPECIAL INTEREST, PROTECTING THE UNPAID PURCHASE PRICE OF
THE VEHICLE.  THE TRANSACTION LOOKS TO DEFEASANCE OF ALL HIS INTEREST
IF COMPLETED IN ACCORDANCE WITH ITS TERMS. 

     *         *         *         *         * 

"I CONCLUDE THAT A CONDITIONAL VENDOR IS NOT AN 'OWNER' SUBJECTED TO
PERSONAL LIABILITY FOR THE HIGHWAY USE TAX AS SUCH."  REP. ATTY. GEN.
N.Y., OP., 219, 220 (1954). 

"'CARRIER' SHALL INCLUDE ANY PERSON HAVING THE LAWFUL USE OR CONTROL,
OR THE RIGHT TO THE USE OR CONTROL OF ANY MOTOR VEHICLE."  TAX LAW,
SEC. 501(5). 

FN5  TAX LAW, SECS. 505, 506. 

FN6  THE LEGISLATURE ADOPTED THE WEIGHT-DISTANCE PRINCIPLE OF
TAXATION AS A SUBSTITUTE FOR THE STATE'S FORMER SYSTEM OF FUEL TAXES
AND LICENSE FEES.  IT REJECTED PROPOSALS IMPOSING FLAT FEES OR
MEASURING THE TAX BY GROSS RECEIPTS.  N.Y. LEG.  DOC.  NO. 67 (1951) 65
80. 

"THE LEGISLATURE HEREBY FINDS AND DECLARES THAT THE OPERATION OF
HEAVY MOTOR VEHICLES UPON THE HIGHWAYS OF THIS STATE GREATLY INCREASES
WEAR AND DAMAGE ON SUCH HIGHWAYS; THAT THERE IS A DIRECT RELATIONSHIP
BETWEEN THE WEIGHT OF THE VEHICLE USING SUCH HIGHWAYS AND THE DAMAGE
DONE TO THEM; THAT THE PERIOD OF USEFULNESS OF SUCH HIGHWAYS IS
SHORTENED BY SUCH USE; THAT THE EFFECT OF SUCH USE IS TO CREATE AND
AUGMENT HAZARDS TO PEDESTRIANS AND OTHER TRAFFIC AND TO IMPOSE ON THE
STATE A HEAVIER FINANCIAL BURDEN FOR HIGHWAY CONSTRUCTION, MAINTENANCE
AND POLICING THAN DOES THE OPERATION OF SMALLER VEHICLES; THAT THE
PROVISIONS OF THIS ARTICLE ARE THEREFORE NECESSARY AND ARE HEREBY
ENACTED TO DISTRIBUTE MORE EQUITABLY THIS FINANCIAL BURDEN AND TO
COMPENSATE THE STATE IN PART FOR THE PRIVILEGE GRANTED TO SUCH HEAVY
VEHICLES OF USING THE HIGHWAYS OF THE STATE AND FOR THE COST OF
ADMINISTERING STATE TRAFFIC REGULATIONS."  LAWS 1951, C. 74, SEC. 1,
MCKINNEY'S N.Y. LAWS, TAX LAW, HISTORICAL NOTE, 711. 

FN7  DURING THE TIME MATERIAL HERE, SEC. 514 OF THE TAX LAW FORBADE
THE DISCLOSURE BY THE STATE OF INFORMATION CONCERNING SUCH TAX
DELINQUENCIES AND MADE IT A MISDEMEANOR TO DIVULGE INFORMATION AS TO
THE TAX RETURNS.  THOSE RESTRICTIONS HAVE NOW BEEN RELAXED.  TAX LAW,
1955 CUM. POCKET PT., 24. 

FN8  THE "TRACTORS" WERE MOTOR VEHICLES SUBJECT TO ARTICLE 21.  THEY
CONSTITUTED THE AUTOMOTIVE PORTION OF TRACTOR-TRAILERS AND ARE REFERRED
TO IN THIS OPINION AS TRUCKS. 

FN9  THE LIEN SUSTAINED AGAINST INTERNATIONAL WAS FOR $3,409.78, WITH
INTEREST ON $2,884.61 AT 1% PER MONTH FROM APRIL 21, 1954.  THAT
AGAINST BROCKWAY WAS FOR $3,698.04, WITH LIKE INTEREST ON $3,158.77
FROM THE SAME DATE.  THE TRUCKS IN NEW YORK STATE HAVE BEEN RELEASED ON
BOND.  AS TO THE TRUCK IN MASSACHUSETTS, THE STATE HAS ASSERTED A LIEN
AGAINST THE PROCEEDS OF ITS RESALE. 

FN10  THE CONSTITUTIONALITY OF THE TAX, AS DISTINGUISHED FROM THE
CONSTITUTIONALITY OF THE LIENS PRESCRIBED FOR ITS COLLECTION, IS NOT
NOW CONTESTED.  MID-STATES FREIGHT LINES, INC. V. BATES, 279 APP. DIV.
451, 111 N.Y.S.2D 578, AFF'D WITHOUT OPINION, 304 N.Y. 700, 107 N.E.2D
603, CERT. DENIED, 345 U.S. 908.  SEE ALSO, CAPITOL GREYHOUND LINES V.
BRICE, 339 U.S. 542. 

FN11  "THE PARTIES TO A CONDITIONAL SALE HAVE DIVIDED PROPERTY
INTERESTS IN THE GOODS.  THE BUYER IS THE BENEFICIAL AND SUBSTANTIAL
OWNER, WITH SUCH ATTRIBUTES OF OWNERSHIP AS POSSESSION, USE AND
CONTROL, AND HAS HIS EQUITY OF REDEMPTION SEDULOUSLY GUARDED BY THE
LAW.  THE SELLER, ON THE OTHER HAND, RESERVES TITLE TO THE GOODS SOLELY
AS SECURITY FOR PAYMENT OR PERFORMANCE BY THE BUYER.  ESSENTIALLY A
CONDITIONAL SALE IS ONLY A CREDIT DEVICE.  ITS PLAIN AND OBVIOUS
PURPOSE IS THE SAME AS A PURCHASE-MONEY CHATTEL MORTGAGE DESPITE
TECHNICAL OR THEORETICAL DIFFERENCES BETWEEN THE TWO FORMS OF
SECURITY."  SCHNITZER V. FRUEHAUF TRAILER CO., 283 APP. DIV. 421, 431,
128 N.Y.S.2D 242, 253, AFF'D WITHOUT OPINION, 307 N.Y. 876, 122 N.E.2D
754; 2 WILLISTON ON SALES (REV. ED. 1948) SEC. 330 ET SEQ. 

FN12  SEE ALSO, AS TO THE INNKEEPER'S LIEN, WATERS & CO. V. GERARD,
189 N.Y. 302, 82 N.E. 143, AND AS TO THE AGISTER'S LIEN, CORNING V.
ASHLEY, 51 HUN 483, 4 N.Y.S. 255, AFF'D WITHOUT OPINION, 121 N.Y. 700,
24 N.E. 1100.  AND SEE HERSEE V. PORTER, 100 N.Y.  403, 3 N.E. 338. 

MR. JUSTICE BLACK CONCURS IN THE RESULT. 

MR. JUSTICE HARLAN TOOK NO PART IN THE CONSIDERATION OR DECISION OF
THIS CASE. 

MR. JUSTICE FRANKFURTER, WITH WHOM MR. JUSTICE DOUGLAS CONCURS,
DISSENTING. 

SO FAR AS THE UNITED STATES CONSTITUTION LIMITS THEM, THE STATES HAVE
THE AMPLEST SCOPE IN IMPOSING HIGHWAY TAXES AND DEVISING RELEVANT MEANS
FOR ENFORCING THEM.  WITHIN THE VAST RANGE OF ITS DISCRETIONARY TAXING
POWER, A STATE MAY PROVIDE THAT A CREDITOR WHO ADDS TO THE CORPUS OF
EQUIPMENT USED BY HIS DEBTOR ON THE STATE'S HIGHWAYS CANNOT BE HEARD TO
COMPLAIN IF HIS EQUITY IN SUCH EQUIPMENT IS SUBORDINATED NOT ONLY TO
TAX LIENS ON THAT SPECIFIC EQUIPMENT, BUT ALSO, AS IS TRUE OF THE NEW
YORK STATE LEGISLATION, FOR TAX LIENS INCURRED BY ALL THE DEBTOR'S
VEHICLES FOR THE ENTIRE PERIOD DURING WHICH THE CREDITOR HAS ENABLED
HIS DEBTOR TO HAVE ADDED VEHICLES ON THE ROAD.  AS A PRACTICAL MATTER,
THE CARRIER'S CREDITOR MAY WELL HAVE ADEQUATE MEANS OF PROTECTING
HIMSELF REGARDING THE INCIDENCE OF HIGHWAY TAXES AND THEIR DEFAULT
DURING THE WHOLE OF THE PERIOD THAT SUCH CREDITOR HELPED TO ENHANCE THE
TOTALITY OF VEHICLES USED BY THE CARRIER. 

WE THEREFORE AGREE WITH THE COURT THAT TAXES INCURRED BY ALL THE
VEHICLES IN EASTERN'S SERVICE DURING THE PERIOD THAT THE THREE
INTERNATIONAL HARVESTER TRACTORS WERE ON THE ROAD MAY BE COLLECTED BY
WAY OF ENFORCING TAX LIENS FOR SUCH TOTAL TAXES AGAINST THE THREE
INTERNATIONAL TRACTORS.  IT IS IMMATERIAL THAT THESE THREE TRACTORS
WERE HELD UNDER A CREDIT ARRANGEMENT WHEREBY INTERNATIONAL HARVESTER
RESERVED INTEREST IN THEM BY WAY OF SECURITY FOR PAYMENT OF THEIR
PURCHASE PRICE. 

A VERY DIFFERENT SITUATION IS PRESENTED FOR SUCH PART OF THE TAXES AS
ARE SOUGHT TO BE COLLECTED BY WAY OF LIEN OUT OF THESE INTERNATIONAL
HARVESTER TRACTORS FOR THE PERIOD ANTEDATING THEIR CONDITIONAL SALE TO
EASTERN. 

PROPERTY IS INCLUDED WITHIN THE TRIAD OF INTERESTS PROTECTED BY THE
DUE PROCESS CLAUSE OF THE FOURTEENTH AMENDMENT - "NOR SHALL ANY STATE
DEPRIVE ANY PERSON OF LIFE, LIBERTY, OR PROPERTY, WITHOUT DUE PROCESS
OF LAW."  WHEN ONE MAN'S PROPERTY IS TAKEN AND GIVEN TO ANOTHER OR, AS
IN THIS CASE, IS TAKEN TO SATISFY THE DEBTS OF ANOTHER, A JUSTIFYING
PUBLIC PURPOSE MUST MEET THE REQUIREMENTS OF THE DUE PROCESS CLAUSE. 
SEE THOMPSON V. CONSOLIDATED GAS CO., 300 U.S. 55, 79-80. 

IT IS ONE THING FOR A CREDITOR, WHO HAS ENABLED HIS DEBTOR TO HOLD
HIMSELF OUT AS HAVING DOMINION OVER PROPERTY WHICH THE CREDITOR HAS
PLACED WITHIN HIS DEBTOR'S CONTROL, TO SUFFER FOR DEBTS INCURRED BY HIS
DEBTOR TO THIRD PERSONS.  IT IS QUITE ANOTHER THING TO SADDLE SUCH
CREDITOR'S PROPERTY WITH SATISFACTION OF PRIOR OBLIGATION TO A THIRD
PERSON WHEN THE CREDITOR HAD NO MEANS WHATEVER OF SAFEGUARDING HIMSELF
AGAINST THE ENFORCEMENT OF SUCH THIRD-PARTY INDEBTEDNESS.  NOR DOES IT
MATTER THAT THE THIRD PARTY IS THE STATE. 

IN THE SITUATION BEFORE US, INTERNATIONAL HARVESTER HAD NO MEANS OF
PROTECTING ITSELF AGAINST HIGHWAY TAXES INCURRED BY EASTERN PRIOR TO
THE TIME THAT IT PUT ITS THREE TRACTORS INTO EASTERN'S HANDS.  IT IS
ADMITTED THAT UNDER NEW YORK LAW IN FORCE AT THE TIME OF THE
CONDITIONAL SALE OF THESE TRACTORS, INTERNATIONAL HARVESTER COULD NOT
POSSIBLY HAVE PROTECTED ITSELF AGAINST THE LOSSES TO WHICH IT IS NOW
SUBJECTED EXCEPT BY AVOIDING SUCH SALES.  IT COULD NOT POSSIBLY HAVE
ASCERTAINED THE TAX LIABILITIES OF ITS CONDITIONAL VENDEE PRIOR TO THE
CREDIT ARRANGEMENT IN THE SALE OF THESE TRACTORS.  IT COULD NOT HAVE
INFORMED ITSELF BY EXAMINING THE TAX RETURNS OF ITS VENDEE.  NEW YORK
MADE IT A MISDEMEANOR FOR ANY STATE OFFICIAL TO DIVULGE SUCH
INFORMATION.  N.Y. TAX LAW, ART. 21, SEC. 514.  THUS, THERE IS NO
CONNECTION WHATEVER BETWEEN THE UNDOUBTED PROPERTY INTEREST THAT
INTERNATIONAL HARVESTER HAD IN THE THREE TRACTORS AND THE EXTENT OF THE
LIEN THAT THE STATE SOUGHT TO FORECLOSE IN THEM.  WHEN ONE CONSIDERS
THE IMPORTANT ROLE PLAYED IN OUR ECONOMY BY CREDIT SALES, IT WILL
HARDLY DO FOR THE LAW TO DEEM SUCH TRANSACTIONS EXTRA-HAZARDOUS AND
SUBJECT SUCH CREDITORS TO AN INSURER'S RISKS. 

WE WOULD THEREFORE REMAND THE CASE TO THE NEW YORK COURTS IN ORDER TO
RESTRICT THE ENFORCIBLE LIEN IN APPELLANT'S TRACTORS TO THE HIGHWAY
TAXES INCURRED BY EASTERN FOR THE PERIOD THAT APPELLANT'S VEHICLES WERE
IN EASTERN'S SERVICE.