Emery Air Freight Corp. v. City of New York, 43 N.Y.2d 742 (1977)
A company providing air shipment services, but not owning or operating aircraft, is not considered to be “actually operating an air line as a common carrier” for the purpose of commercial rent tax deductions related to premises used for air transportation purposes under the New York City Administrative Code.
Summary
Emery Air Freight Corp. challenged a deficiency in New York City Commercial Rent Tax assessed by the City of New York Finance Administration. Emery sought a rent deduction for “premises used for air transportation purposes,” arguing it qualified under the Administrative Code. The court upheld the City’s determination that Emery was not entitled to the deduction because it did not “actually operat[e] an air line as a common carrier.” The court reasoned that Emery, which offered an air shipment service without owning or operating aircraft, did not meet the statutory definition. The decision highlights the importance of strict interpretation of statutory language in tax law.
Facts
Emery Air Freight Corp. provided air shipment services to the public, delivering cargo to and recovering it from airlines. Emery did not own or operate aircraft during the period from June 1, 1969, to May 31, 1972, for which the deficiency was assessed. Civil Aeronautics Board regulations prohibited Emery from operating aircraft. Emery sought a rent deduction for its premises, claiming they were used for air transportation purposes as defined in the New York City Administrative Code.
Procedural History
The City of New York Finance Administration assessed a commercial rent tax deficiency against Emery Air Freight Corp. Emery challenged the assessment, arguing it was entitled to a rent deduction. The lower courts affirmed the City’s determination. The New York Court of Appeals then reviewed the decision.
Issue(s)
Whether Emery Air Freight Corp., which provides air shipment services but does not own or operate aircraft, is “actually operating an air line as a common carrier” as defined by the New York City Administrative Code § L46-1.0, subd 9, and therefore entitled to a commercial rent tax deduction for premises used for air transportation purposes.
Holding
No, because the court found that the respondent rationally concluded that the petitioner was not “actually operating an air line as a common carrier” during the audit period, and in light of the definition of premises entitled to a rent deduction, respondent’s determination cannot be termed unreasonable.
Court’s Reasoning
The court based its decision on the specific language of the New York City Administrative Code. The relevant section, § L46-1.0, subd 9, defines “premises used for air transportation purposes” as a portion of premises within an airport or air transportation terminal, used by a person “actually operating an air line as a common carrier” for normal air transportation purposes. Since Emery did not own or operate aircraft, the court agreed with the City’s determination that Emery was not