People ex rel. Butterick Co. v. Gilchrist

Headnote

Tax—franchise tax — when corporation not doing business within State within meaning of statute imposing franchise tax.

People ex rel. Butterick Co. v. Gilchrist, 213 App. Div. 533 , affirmed.

Appeal from an order of the Appellate Division of the Supreme Court in the third judicial department, entered July 10, 1925, which annulled, on certiorari, a determination of the State Tax Commission, made upon the relator’s application for revision and resettlement of its account for franchise taxes assessed under section 182 of the Tax Law for the years 1906 to 1916 inclusive. The relator was incorporated under the laws of this State and maintained an office in this State where its meetings were held, but it transacted no business except to receive the income from the dividends upon the stock and interest upon the bonds of its subsidiary corporations in which stocks and bonds its entire capital was invested. This income was deposited in a bank in the city of New York and distributed to its stockholders. It had no other funds in bank. No business of any nature whatever was done outside of the State. The relator owned no real or tangible personal property within the State and had no employees and no payrolls. Its officers received no salary. Its office was a nominal one and it paid no office rent. It never participated in the manufacture and sale of any of the articles as authorized by its certificate of incorporation, although some of its subsidiary corporations were engaged in such business, but during the years in question it appeared that the relator on several occasions indorsed notes for two of its subsidiaries. The Tax Commission held that such acts of loaning credit constituted the doing of business within the State.