People ex rel. Dutilh-Smith, McMillan & Co. v. Miller

By section 181 of the tax law (Laws 1896, p. 856, c. 908, as amended by Laws 1901, p. 1365, c. 558) the license fee is to be computed upon the basis of the capital stock employed by the corporation within this state during the first year of carrying on its business. The section then reads:

“The tax imposed by this section on a corporation not heretofore subject to these provisions shall be paid on the first day of December, 1901, to be computed upon the basis of the amount of capital stock employed by it within the state during the year preceding such day; unless on such day such corporation shall not have employed capital within the state for a period of thirteen months, in which case it shall be paid within the time otherwise provided by this section.”

While this provision of the statute is not clear, the only interpretation possible which will give effect to its provisions is that, if the corporation has not done business for 12 months, it shall pay the license fee at the time otherwise prescribed in the section, to wit between 12 and 13 months after it shall have commenced to employ capital' within this state. Inasmuch as the company did not come into the state until September 15, 1901, it had not, at the time this tax was stated in the comptroller’s account, employed capital within this state for a period of 12 months, and was therefore not then subject to the payment of the license fee. The readjustment of this tax, however, was upon October 6, 1902. At that time the relator had been employing capital within the state for 12 months, and was properly subject to the payment of this license fee upon the actual capital em

From the evidence presented to the comptroller it appeared that this corporation was simply acting as the agent of the American Car & Foundry Company. By the contract of its agency the relator was not permitted to sell any goods in the United States. . Their business was solely in making contracts in foreign countries. These contracts-were made through the agencies in those foreign countries, and the-orders were sent direct to the American Car & Foundry Company, as was also the money due upon the contracts. The compensation of the relator was 2% per cent, upon the contract prices paid. There was, .in addition to this, some construction work, which was sublet, however, but which was entirely carried on in England, and outside of the United States and the state of New York. In fact, the New York office of this corporation appears to have been simply the headquarters in which were received the reports from these various agents, and from which were given to them their instructions.

We are unable to find any capital of the relator employed within the state of New York. While the good will of a corporation has been held at times to be a part of the capital employed within this state, it has never been so held where substantially all the business of the corporation was carried on in foreign countries. Their business was that of selling goods exclusively in foreign countries, and there, it seems to me, their capital, including their good will, was employed. The mere fact that the headquarters were in New York, from which place directions were given, and at which place orders were received, does not change the nature of the business from one essentially foreign to one transacted within the state. See People ex rel. Chicago Junction R. & U. S. Co. v. Roberts, 154 N. Y. 1 , 47 N. E. 974 .

The decision of the comptroller should therefore be reversed, with $50 costs and disbursements to the relator. All concur.