In re Thayer's Estate

Decedent died at her domicile, Keene, N. H., May 35, 1905, owning, among other properties, 1,714 shares of the capital stock of the Fitchburg Railroad Company and 8 shares of the capital stock of the Boston & Albany Railroad Company. This proceeding was instituted by the State Comptroller to determine the transfer tax. The first appraiser filed his report February 13, 1906, reporting the property above specified with other personal estate and appraising it at its full market value, the former at $144 per share, or $346,816, and the latter at $356 per share, or $3,048. The executors appealed from the formal order, and such proceedings were thereafter had (awaiting the decision of the Court of Appeals in Matter of Cooley’s Estate, 186 N. Y. 330 , 78 N. E. 939 , 10 L. R. A. [N. S.] 1010) as resulted in an order of the surrogate, dated December 34,1906, remitting the report to a second appraiser for reappraisal “and for the taking of further evidence herein in accordance with the decision rendered by the Court of Appeals in this state in Matter of the Estate of Francis B. Cooley, Deceased.” The second appraiser retired from office without filing any report, and in February, 1907, a third appraiser was designated, who filed a report August 39, 1907, in which he reported that he had taken the mileage distance between the terminal points within and without the state as a basis. The Comptroller and the executors both appeal, the former upon the ground that the appraiser erred in failing to appraise the stock of the Fitchburg Railroad Company at its full market value. He would distinguish this case from

The executors have appealed on the following, among other, grounds: (1) That so much of said tax as exceeds 23.01 per cent, of the value of the Fitchburg Railroad Company stock is invalid, void, and unconstitutional, in that it appears that said railroad is a consolidated corporation organized and incorporated under the laws of the states of Massachusetts, New York, Vermont, and New Hampshire, and that it appears that the proportion of the said shares representing property within the state of New York is 23.01 per cent., and no more; and (2) a similar appeal as to so much of the tax as exceeds 18.37 per cent, of the value of the Boston & Albany stock. Both parties seemingly agree that the Court of Appeals, although it has decided.in the Cooley Case that an apportionment is proper, has not as yet laid down or approved a definite rule for such apportionment. Matter of Cooley’s Estate, 186 N. Y. 231 , 232, 78 N. E. 939 , 10 L. R. A. (N. S.) 1010 . Each litigant advocates a different rule, and upon the one to be adopted this appeal will turn. If any fair, common-sense rule of proportion may be taken, it is manifest that much saving may be had both to the state and the people, who still commonly think that they themselves pay this tax. If, on the other hand, we shall adopt a rule of mathematical refinement and exact nicety, and “to the extent of a detailed inventory and valuation of innumerable pieces of property,” we may be sure that the proceedings “may be” (and will be) “made a source of much labor and expense.” Each railroad system has something characteristic about its individual formation. What court could decide what are the real termini of the Boston & Maine Railroad? The map submitted in the brief of the executors of the Fitchburg Railroad in the state of New York illustrates this point. If the termini are the great cities, then Troy is the New York terminus. If extreme length of line, including so-called “branches,” makes the terminal, then probably Saratoga Springs or Schuylerville, according to their relative distance, may be it. As a matter of fact the Fitchburg

I am of opinion that the total mileage method works the most substantial justice, and is the best working hypothesis upon whFh to arrive at the proper apportionment. Branch lines are then taken into account as elements of value. The decedent’s stock in the Fkchburg Railroad derives some increment of its value from every branch, spur, siding, and switch of that railroad system. From the nature of things total mileage more nearly approximates the larger and real value: for instance, the Fitchburg Railroad runs through the town of Greenfield, Mass. The value of the property of the railroad in that locality is naturally large, but the main line runs through that town no differently than through the wilderness or the swamp, in both places being a mere suggestion of lineal measure; whereas, accumulated at Greenfield, for the very reason that it is a city requiring business facilities, are miles of double tracks, side tracks, sidings, and switches, all of which will completely figure forth in the total mileage of the Fitchburg

The gross track mileage of the Fitchburg Railroad system is 781.17 miles, of which 215.18 miles are within the state of New York. It owns in Boston and Somerville, Mass., wharves, grain elevators, and connecting tracks (a marine terminal) which are outside of and apart from the ordinary freight-and- passenger terminals. The value of this special property, $1,812,000, should be deducted from the total capital before apportioning the capital stock on a mileage basis. Pittsburgh, C., C. & St. L. R. R. Co. v. Backus, 154 U. S. 421 , 14 Sup. Ct. 1114 , 38 L. Ed. 1031 . It results, therefore, that a share of stock of the Fitch-burg Railroad Company on the basis of a valuation of $144 per share represents property in the state of New York of the value of $36.73. The facts relating to the Boston and Albany Railroad stock are similar, and the principle applicable thereto is the same. Applying this principle to the total mileage, a share of Boston & Albany stock, at a valuation of $256 per share, the value at the date of the death of the decedent represents property in the state of New York of the value of $47.02. Counsel for the Comptroller contended that the rule of apportionment should be based upon the "main line mileage.” The appraiser adopted this rule intimating that he was following the suggestions of the court in the Cooley Case. I do not understand that the Court of Appeals adopted a specific rule as to such apportionment, but that it is suggested in- that case, notwithstanding that “the learned counsel for the respondent (here also representing the Comptroller) has suggested many difficulties and absurdities claimed to be incidental to such course of procedure,” that such an apportionment might possibly be had (1) upon an apportionment of the entire property between the various states by means of a “detailed inventory and valuation of innumerable pieces of property”-; or (2) “upon track-age” which I do not interpret, as the appraiser seems to have done, to mean “main line mileage”; or (3) upon “figures drawn from the books or balance sheets of the company.” It seems to me that the latter method, as applied to the facts in the present case, is as objectionable as the detailed inventory plan would be on the score of its complexity and expense, and such accounts are also supposed to represent the cost and not the value, and that, too, possibly, at an ancient date. Moreover, we look askance .in these days at a corporation’s construction account, which often seems to welcome items scarcely germane to original value, betterments or additions. Counsel for the Comptroller’s definition for “main line mileage” is “the geographical distance between the terminals within the state, as compared to those without the state, measured' along- the line of the railroad.” But who is' to select

The Comptroller’s appeal should be overruled, and the appeal of the executors should be sustained to the extent hereinbefore set forth. Submit order upon notice accordingly. Decreed accordingly.