People ex rel. A. G. Hyde & Sons v. O'Donnel

The relator, a domestic corporation, was as-purposes year 1904 at sum $940,000. That amount was made up by including within it the value of

Under the Revised Statutes, this personal property would not have been taxable. Hoyt v. Tax Commissioner, etc., 23 N. Y. 224 . By the Tax Law, Laws 1896, p. 795, c. 908, it is provided that real property within this state, and all personal property situate or “owned” within this state, is taxable, unless exempt from taxation by law. Construction was given to that provision by this court in the case of People ex rel. Orinoka Mills v. Barker, 84 App. Div. 469 , 83 N. Y. Supp. 33 , and it was therein held that certain raw material and manufactured goods owned by the relator but situate at mills in Pennsylvania were not taxable here, and in effect that the ruling in the Hoyt Case still prevailed. The Orinoka Mills Case must be regarded as controlling here, unless it can be held that the relator’s goods above mentioned were only temporarily without the state. But those goods and the raw material never were within this state. The right to tax them arises under the statute only, and the test of the right to tax them is the situs of the property on the first Monday of January, 1904. The fact of dominion of the state over the subject of taxation at the time the tax is imposed is declared to be the test in the Matter of Swift, 137 N. Y. 85 , 32 N. E. 1096 , 18 L. R. A. 709 . What was to become of the property after that date is irrelevant. The relator might or might not bring it within the state, and the mere presumption arising from its customary dealing with its property is not a detriminant factor in the consideration of its liability to the imposition of a tax on the first Monday of January, 1904. The case of the Orinoka Mills is binding authority, and what was there decided requires an affirmance of the order appealed from.

The order should be affirmed, with costs and disbursements. All concur, except CLARICE and SCOTT, JJ., who dissent.

(dissenting). It seems to me that People ex rel. Orinoka Mills v. Barker, 84 App. Div. 469 , 83 N. Y. Supp. 33 , is clearly distinguishable from the case at bar. If not, although agreeing with Mr. Justice Hatch in his dissenting opinion therein, I would feel bound by the decision of this court. In that case it appeared that the relator had machinery and fixtures, as a part of its factory, located in the state of Pennsylvania, and that there was at the relator’s mills in said state $25,-000 in merchandise and materials. The petition alleged that all of the assets of the relator were situate without the state of New York and within the state of Pennsylvania, “and there subject to assessment for taxation, and although assessments for taxation are and were paid thereon by your petitioner in said state of Pennsylvania.” Ijt was upon those facts that a divided court held that the merchandise and materials at the mills were not taxable.

The authority relied on in that case (People ex rel. Hoyt v. Com’r of Taxes, 23 N. Y. 224 ) was itself as distinguishable. A resident of New York had capital employed in business in New Orleans which was taxable and was taxed there, and farm stock and household furniture in the state of New Jersey which were taxable by the laws of the state of New Jersey. The property had an actual permanent situs outside the state, and tire decision of the court rested upon the proof that the property was outside the state.

In the case at bar, however, the relator, a domestic corporation, having its principal office or place of business in the city of New York, buys raw material which consists of cotton cloth in the gray from various mills in the South and in the New England states. This cotton cloth is kept at the mills until used, when it is shipped to the bleacheries and finishing works located in New' England, New Jersey, and the South, where it is made up or converted into the finished fabric in which the company deals. The process of conversion takes upon the average four or five months. Five-sixths of the product is shipped to New York for sale and disposition, and one-sixth to its office in Chicago. On the second Monday of January, 1904, the amount of raw material (gray cloth), goods in process, and finished product was $924,611.63. No part of this tangible personal property belonging to the relator had ever been within the state prior to that date. It belonged, however, to. the relator, and subsequently came within the state and was disposed of here. All the debts of the relator, amounting to $947,203.61, wherever payable and to whomsoever payable, in or out of the state, had been allowed as a reduction. The tangible personal property outside of the state determined to be taxable in the state was fixed at $770,000, and was determined by the commissioners to be taxable upon the ground that it had no permanent situs without the state. The reason why property permanently located without the state is held not to be taxable here is that it is presumed to be taxable where located, and to tax it here would be to subject it to double taxation.

I fail to see how goods in transit from mill to bleachery, and thence to store here, can be reached and taxed in the state of temporary situs. The burden is upon the relator, it seems to me, to sustain the allegation of the petition, and to show that the goods are so permanently

It therefore seems to me that the order appealed from should be reversed and the assessment sustained.

SCOTT, J., concurs.