The petitioner, as vendor, collected from its vendees taxes upon sales of gasoline in accordance with Local Law No. 24 of 1934 (published as No. 25) of the city of New York and supplementary regulations promulgated by the Comptroller of the city. One of these regulations attempted to say that the city sales tax base should include State excise taxes on gasoline. InSocony-Vacuum Oil Co. v. City of New York (247 App. Div. 163;272 N.Y. 668), that regulation was declared null and void. This is a certiorari proceeding to review an assessment against the petitioner of the illegal tax thereby prescribed. The amount thereof was deposited with the Comptroller before the order of certiorari was granted, as the local law validly required. (§ 7;Matter of Western Electric Co. v. Taylor, 276 N.Y. 309.) The city appeals from an order of the Appellate Division which annulled the determination of the Comptroller and directed refund to the petitioner of the deposit.
The local law was enacted under the authority of enabling State legislation designed to provide revenue for unemployment relief. (New York Steam Corp. v. City of New York, 268 N.Y. 137.) "It was by virtue of these enabling acts that the local laws were adopted, and the source of the imposition of these taxes is not to be found in the local laws themselves. The enabling acts were passed by the Legislature for a State purpose, public health and welfare. Both opinions in the New York Steam Corp. case emphasize this fact and that the city acted merely as agent of the State, and the concurring opinion stresses the proposition that the Legislature did not delegate its taxing powers to the extent of abdicating its constitutional function." (John HancockMut. Life *Page 296 Ins. Co. v. Pink, 276 N.Y. 421, 426.) While in that aspect this controversy is one between the petitioner and the State, the court below had full power to adjust the rights of the parties upon principles of equity. (Cf. People ex rel. ForestCommission v. Campbell, 156 N.Y. 64.) Accordingly the prayer of this petition is that "any error committed in said determination and assessment may be reviewed and corrected according to law, and that your petitioner may have such other and further relief as to the court may seem just."
The issue — as the petitioner states it — is merely one of power to lay the challenged assessment. On that basis it is argued that the city is out of court by force of the doctrine that so much of an act as is void neither confers rights nor imposes duties and "is, in legal contemplation, as inoperative as though it had never been passed." (Norton v. Shelby County,118 U.S. 425, 442. See Cooley, Constitutional Limitations [8th ed.], pp. 382-384.) So the Appellate Division held. We think the case is by no means so easy of disposition.
The fund was collected by the petitioner from its customers at one of its places of business. In accordance with section 14 of the local law, the petitioner there prominently displayed a "Registration Certificate and Authority to collect City Sales Tax for Relief of Unemployed." This certificate announced that the petitioner was empowered by the Comptroller "to collect for the City of New York" the tax "known as the Sales Tax, the receipts from which are to be used exclusively for the purpose of relieving the people of the City of New York from the hardships and suffering caused by unemployment and the effects thereof on the public health and welfare." The authority so asserted was valid and the collections made by the petitioner thereunder are not questioned, except for the minor fraction representing the Comptroller's erroneous extension of the tax base. We think it is reasonably clear that when a validly designated functionary thus avowedly receives money for a *Page 297 sound public purpose, he may not keep it merely because a specific edict under which he acted was void. (See People exrel. Martin v. Brown, 55 N.Y. 180; Spencer v. Consumers OilCo., 115 Conn. 554.)
Indeed, the petitioner outspokenly disavows any interest of its own in the fund. With candor that does them credit, its counsel say that the many small sums involved rightfully belong to those by whom the payments were made. The Appellate Division was of opinion that whether the petitioner could or would restore the fund to its source was immaterial, and the record of the hearing accorded by the Comptroller to the petitioner leaves that matter in the dark. (Cf. Van Antwerp v. State, 218 N.Y. 422.) We are thus left with the question of the petitioner's supposed liability to those from whom the sums were collected.
Petitioner got this fund on its declaration that its customers were paying a tax for transmittal to the city treasury for unemployment relief. The valid general authority to the petitioner to collect the city sales tax was disclosed. Petitioner was not bound to ascertain whether the Comptroller's regulations went beyond the limitations of law. The sales tax was not imposed on the vendor. It fell upon the purchaser (Matter ofMerchants Refrigerating Co. v. Taylor, 275 N.Y. 113, 124), and the purchaser had a direct remedy against the Comptroller for a refund under the local law (§ 10). In these circumstances, we think that the deposit with the Comptroller of the moneys illegally exacted should be held to have absolved the petitioner from liability to its payors.
Our conclusion is that the petitioner is not entitled to have returned to it this fund in which concededly it has no beneficial interest.
We express no opinion as to the date of accrual of the refund rights of any person upon whom the illegal tax was imposed.
The order of the Appellate Division should be modified by striking therefrom the direction for refund of the *Page 298 deposit to the petitioner, and, as so modified, affirmed, without costs.