TAXATION - PUBLIC UTILITIES - IMPLIED CONDITION IN UTILITY FRANCHISE OF TAX EXEMPTION

Authors

Allen A. Rubin, University of Michigan Law SchoolFollow

Abstract

In 1917 the city of New York and the New York Municipal Railway Corporation, predecessor in interest of the appellant, the New York Rapid Transit Corporation, entered into a contract for the operation of part of the city's transit system. The Transit Corporation was thereby obligated to furnish its services for a five cent fare, which by city charter provision could not be changed without the approval on referendum of a majority of the qualified voters. Other relevant portions of the contract provided that the corporation should pay all taxes upon its property and taxes incurred in connection with the operation of the railways, and for the disposition and allocation of the gross receipts from the enterprise between the contracting parties. Subsequently the city imposed a franchise tax upon the corporation measured by a percentage of the gross receipts. The corporation contended that this impaired the obligation of the contract with the city. Held, that since no express provision exempted the corporation from taxation, the contract was not impaired. New York Rapid Transit Corp. v. City of New York, 303 U. S. 573, 58 S. Ct. 721 (1938).

Recommended Citation

Allen A. Rubin, TAXATION - PUBLIC UTILITIES - IMPLIED CONDITION IN UTILITY FRANCHISE OF TAX EXEMPTION, 37 Mich. L. Rev. 820 (1939).
Available at: https://repository.law.umich.edu/mlr/vol37/iss5/24