Hillman Periodicals, Inc. v. Gerosa

Per Curiam. This is a proceeding under article 78 of the Civil Practice Act to review a determination of the comptroller of the city of New York assessing sales taxes against petitioner, a corporation which publishes comic books. Petitioner, pursuant to contract, paid to various commercial artists — pencillers, letterers and inkers — an agreed amount per page for drawing and lettering work. This work was performed on cardboards or art boards, furnished sometimes by the artist and sometimes by petitioner. The artists, who were the vendors under their contracts with petitioner, “ vested ” all rights in petitioner, “assigned all right, title and interest ” in the material to petitioner and clearly retained no rights whatsoever in the finished products. Petitioner was given express permission to make necessary changes, and admittedly could correct, retouch and otherwise change the art board after it had been delivered by the artist. These art boards were either consumed in the engraving process or discarded. Something more than a mere right to reproduce was sold in this case, thereby distinguishing these sales from those reviewed in such cases as Matter of Frissell v. McGoldrick (300 N. Y. 370) and Howitt v. Street & Smith Pubs. (276 N. Y. 345). Here there was an integration of the services rendered into tangible personal properties which were sold irrevocably to petitioner. In the Frissell and Eowitt cases the vendors retained title to their integrated products and could still sell these products after return by the vendees. In the latter event, of course, the tax would attach. The statutes and implementing Sales Tax Regulations, in imposing the tax, do not recognize a variance, no matter how discrepant, between the value of the services and the value of the personal property into which they are integrated. Nor do [443] they take account of whether the product is virtually valueless to anyone but the purchaser (Administrative Code, § N41-1.0, et seq., particularly subd. 7 thereof; N. Y. City Sales Tax Rules & Regulations, arts. 70, 76). Accordingly, the transactions in question were subject to tax, upon the authority of Andersen v. City of New York (295 N. Y. 782) and Pagano, Inc., v. City of New York (295 N. Y. 784). The determination of the comptroller should be confirmed.