Majority
Headnote
1. Taxation (§ 61[2] )—Property Subject to Special Franchise Tax—“Special Franchise.” .This is a certiorari proceeding to review the action of the State Board of Tax Commissioners in assessing as a special franchise the right of the relators to maintain a tunnel or passageway under Livingston street and between their buildings on each side thereof; the whole property including both buildings and the passageway being used for the purposes of a retail dry goods store. The right was granted to the relators by resolution of the board of estimate and apportionment, dated December 15, 1905, and applied to that portion of the land under the street which is owned in 'fee by the city of New York. Whatever right the relators acquired under the resolution of the board of estimate and apportionment of December 15, 1905, does not constitute a special franchise, and is not taxable as such. This species of property was first subjected to taxation by chapter 712, Laws 1899. The act is entitled “An act to amend the tax law, in relation to the taxation of public franchises as real property.” It did not purport to, and did not, render taxable anything except .“public” franchises, including therein tangible property in the streets used in connection therewith. This does not include easements, licenses, leasehold interests, or any other rights, unless they fall within the definition of a franchise. Blackstone defines a franchise as a “royal privilege or branch of the king’s prerogative subsisting in the hands of the subject. Being derived from the crown, it must arise from the king’s grant.” Commentaries, book 2, c. 3, subd. 7. Substituting the “people” for the “king,” and the definition may apply to-day. A franchise, therefore, can be granted only by the Legislature, or by some agent duly authorized thereby. A municipality as such has no power to grant a franchise, or if it has, it acts simply as the authorized agent of the Legislature. It is said that even the Legislature has no power to grant a franchise except for public purposes, or, at least, public considerations must enter into the grant. Fanning v. Osborne, 102 N. Y. 441 , 7 N.
It is not necessary to consider what, if any, rights the relators secured under the' resolution. The city is not only a governmental agency, but a proprietor. It owns as proprietor the fee of a strip of land 30 feet wide under the southerly portion of Livingston street. Its ownership is in trust for highway purposes for the benefit of the public. Because the trust is for the people at large, and not for the city or the inhabitants of the city, the control of the streets is vested primarily in the Legislature; but the city has power to grant certain licenses and privileges therein, provided the same do not interfere with the rights of the public, and such power has been long exercised. Granting the right to construct vaults under the sidewalks is one of the most common methods of exercising the power. I suppose that, although the city holds the fee in trust for street purposes, it has all proprietary rights not inconsistent with such purposes. The rights of the relators, if they secured any under the resolution, were granted by the city as proprietor of this strip of land, and not as agent of the ■state in granting a franchise. Such rights are of the same nature as and certainly no greater than if granted by private parties owning the fee in the street subject to highway easements. Such rights do not •constitute a franchise. People ex rel. Retsof Mining Company v. Priest, 75 App. Div. 131 , 77 N. Y. Supp. 382 , affirmed in 175 N. Y. 511 , 67 N. E. 1088 .
The assessment is illegal, and must be stricken from the rolls, with costs to the relators.
Cases cited
- Fanning v. Osborne 102 N. Y. 441 p. 437
- Hatfield v. Straus 189 N. Y. 208 p. 438
- People ex rel. Retsof Mining Co. v. Priest 75 App. Div. 131 p. 438