Apgar v. Hayward — 18 N.Y. St. Rep. 169

Majority

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Levi Apgar, Resp’t, v. John N. Hayward et al., Appl’ts.^[1]

Court of Appeals,

Filed October 2, 1888.)

Headnote

1. Taxes and assessments—Banks—Assessment of bead estate and stock—Connection of assessment boll—Laws 1866, ciiaf. 761.

By the record of assessed valuations of real and personal estates, filed in the office of the commissioner of taxes in January, 1881, pursuant to law, the real estate of the North River Bank was valued at §96,000, of which §94,800 was the assessed value of its hanking house. Upon the same record the names of the plaintiff .and his assignors appeared as holders of shares of the stock of said, hank, with an assessed valuation at the rate of $23 per share. (This valuation heing obtained as required by Laws 1866, chapter 761). The plaintiff herein, as president of said bank, on the thirtieth day of April, 1881, applied for a reduction of the assessed value of the banking house, alleging that the assessed value was too high. Upon hearing and examination, the assessed valuation was fixed at $54,800, a reduction of §40,000. There was no complaint as to the gross valuation of the shares. When such reduction in the assessed valuation of the real estate was made, the commissioners added §40,000 to the gross valuation of the shares of stock, and thereby increased it to the rate of §28 per share. Held, that the commissioners were justified in corcecting the record as to the shares, by making it conform to the result required by the statutes. (Laws 1866, chap. 761). That they did not, in fact, increase the assessed value of the shares, but simply withdrew from the shareholder the benefit of a credit to which he became disentitled, and which was in fact erroneous, in consequence of the reduction involuntarily made in the valuation of the banking house.

2. Same—What is not an incbbase in the assessed valuation of STOCK OF BANK.

There is an essential difference between an increase of assessed valuation of an item of property standing by itself, and an item of property which,

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for the purpose of valuation, cannot he separated from other property, and upon the true value of which the assessed value of that item must depend.

■3. Same—Laws 1859, chap. 302, §§ 10 and 11, and Laws 1866, chap. 761— When requirements op all cannot be complied with.

There is an incongruity in the statutes (Laws 1859, chap. 302, §§ 10 and 11, and Laws 1866, chap. .761), which renders it impossible, in a case like the one in question, to adapt the provisions of secton 11 of Laws 1859, about giving notice to that embodied in section 10 of the same act, and at the same time give proper effect to the Laws of 1886.

4. Same—Commissioners op Taxes act judicially—Only liable por ERRORS MALICIOUSLY PERPETRATED.

The defendants, as commissioners, had jurisdiction over the person of the shareholder and over the subject of the tax. In dealing with the question brought before them, they exercised a judicial function, and if in error, no action lies against them, unless that error was perpetrated maliciously.

Appeal from a judgment of the general term of the superior court of New York city, ordered for the plaintiff on the verdict. The case was tried before a jury, and the trial court directed a verdict for the plaintiff, and ordered the exception to be heard in the first instance at general term.

The action was brought to recover damages sustained by reason of the collection by a marshal under a warrant issued to him for the-collection of the taxes of 1881, of certain taxes assessed against certain persons. The claims of the various parties were all assigned to the plaintiff. The total sum, which was collected prior to March 2, 1882, was $2,365.93. The other facts will be found in the opinion.

D. J. Dean, for app’lts; Nelson Smith, for resp’t.

The action is against the defendants as -commissioners of taxes and assessments in the city of New York for acts done by them in the year 1881, in consequence of which the plaintiff charges that his property and that of other persons, his assignors, was taken and applied to the payment of taxes illegally imposed.

"Upon trial in the superior court of the city of New York it appeared that the plaintiff and his assignors were residents of New York city and owners respectively of certain shares in the North River Bank, an institution located in the third ward of that city, with a capital of $240,000, divided into 8,000 shares; that in January, 1881, the annual record of assessed valuations of real and personal estate was filed in the office of the commissioners of taxes, and upon that record the real estate of the bank was valued at $90,000, of which $94,800 was the assessed value of its banking house. Upon the same record are the names of plaintiff and his asssignors as holders of shares, with an “assessed valuation” at the rate of twenty-three dollars per share. This sum was reached by allowing each shareholder in the assessed valuation of their shares the benefit of a reduction

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from their real estate value in the same proportion as was the assessed value of the real estate of the bank to the whole amount of its capital stock. In that respect the commissioners are sustained by the act of 18G6 (Laws of 1866, chapter 761).

This act prohibits any assessment upon bank capital, but leaves its real estate subject to the same taxation as is that of other owners, and makes the stockholders in the bank liable to assessment on the value of their shares, after deducting therefrom the assessed value of the real estate of the bank. The commissioners, therefore, in the course of their official duty first spread that assessed value, viz., $96,000, over 8,000 shares, making twelve dollars to be applied on each share, and then fixed the assessed value of such share at twenty-three dollars. This shows the actual value of the share according to the estimate of the commissioners to have been thirty-five dollars. Hp to this point no complaint is made of the action of the commissioners. They, however, subsequently changed the assessed value from twenty-three dollars to twenty-eight dollars, thus adding five dollars per share, making in gross an addition upon the 8,000 shares of $40,000, and the real question in the case is, whether the change was within the authority of the defendants. The court below held that it was not, and as it appeared that the tax was collected, judgment was awarded against the defendants for the entire tax upon the valuation of twenty-eight dollars per share of the stock held by the plaintiff and his assignors. In any view of the case we think there is error in the judgment.

It is not denied that the shares were liable to taxation to some extent. Indeed the plaintiff’s claim concedes that the assessed valuation was correctly made. His contention is, that the increase by the corrected valuation was illegal. It is not claimed, however, that the commissioners acted in bad faith, or from an ill motive, or with any other purpose than the performance of official duty, and from these circumstances it would at least follow, that their liability could not exceed the actual damages sustained by the taxpayer. Those damages, if any, are represented by the difference between the sum due under the assessed valuation, and the sum called for by the corrected valuation, viz: five dollars per share. But another objection is taken by the appellant, which goes to the foundation of the action, and the conclusion to which we have come on that makes it unnecessary to discuss the former. This objection is based upon the provisions of the statute which confers jurisdition upon the defendants as “tax commissioners of the city of New York.” As such they constitute a board which superseded the offices of ward assessors and commissioners of taxes theretofore existing in that city. Laws of 1859,,

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chap. 302. Their jurisdiction extends throughout the city, and under their direction all the taxable property therein is to be assessed (section 7), and its “ assessed valuation ” entered in books to be kept by them, and called “the annual record of the assessed valuation of real and personal estate. ” These books are required to be open for examination and correction from the second Monday of January, to the first day of May, in each year, with notice by advertisement of that fact, in such manner as they may deem advisable, and are to be then closed to enable the commissioners to prepare assessment-rolls of the several wards for delivery to the aldermen. The statute also provides (section 10), that during the time above mentioned, application may be made by any person considering himself aggrieved by the assessed valuation of his real or personal estate, to have the same corrected, requires the commissioners to examine the complaint, and declares that “if in their judgment, the assessment is erroneous, they shall cause the same to be corrected.”

The plaintiff in this case was the president of the North River Bank, and on the 30th day of April, 1881, and therefore within the time prescribed for such application, he caused to be presented to the commissioners the petition of the bank, signed by himself as its president, alleging that the assessed value of the banking house, viz., §94,-800, was too high by at least two-thirds, and prayed that it be reduced accordingly. Upon hearing and examination the petition was to some extent granted, and on the 30th day of April, the. assessed valuation of the property was fixed at $54,800, a reduction of $40,000. No complaint was made as to the gross valuation of the shares, and it seems obvious, in view of the act of 1866 (supra) that the diminution in the assessed value of the real estate, required a change in the assessed value of the shares, otherwise the value of the shares would not be assessed and a portion of the property of the bank would escape taxation. Upon the assumption that the real estate of the bank was worth $94,800, so much was, as it were, credited to the stockholder and the balance only of the share assessed. If the original assessment of the real estate was erroneous, it is clear that its correction made-necessary some correction or alteration in the assessment to the shareholder, and the making of such correction or alteration was within the jurisdiction of the commissioners and within the scope of their authority, unless restrained by a provision of the act—that of 1859—already referred to. It is provided by section 11 of that act that the commissioners may at any time-before the second day _of April in each year, increase the assessed valuation of

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any real or personal estate as in their judgment may be necessary for the equalization of taxation, “but,” and upon the construction given to this clause the plaintiff has so far succeeded in the action, “but they shall not increase such valuation after said books are open for examination and review, except upon notice being given to the party affected by such increase, twenty days before the closing of the books.” There is an incongruity in these statutes which renders it impossible to adapt the provision just referred to, to that embodied in section 10 of the act of 1859, and at the same time give proper effect to chapter 761 of the Laws of 1866 (supra). By the latter the assessed valuation of the shares of stock, personal property, depends upon the assessed valuation of the real estate of the bank.

By the act of 1859, § 10, the assessed value of the real estate of a bank may be changed at any time while the books are open, and that is up to the first of May, but the valuation of neither real or personal estate can be increased except upon previous notice of twenty days. The reduction of the valuation of the real estate of the bank was therefore legal under this statute, but notice of the increase of the assessed value of the shares was impossible, owing to the late application of the bank in relation to its real estate. Tins delay should not be to the advantage of its stockholders, nor the prejudice of the defendants. The correction of one valuation made necessary the alteration in the other.

If we look at the literal language of the statute of 1866 (supra), and the literal language of section 10, of the act of 1859, it is impossible not to see that the defendants have kept w^uhin the terms of each, and we think they were justified in correcting the record as to the shares by making it conform to the result required by these statutes. They did not in fact increase the assessed value of the shares, but simply withdrew from the shareholder the benefit of a credit to which he became disentitled and which was in fact erroneous in consequence of the reduction involuntarily made in the valuation of the banking house. There seems to be an essential difference between an increase of assessed valuation of an item of property standing by itself, and an item of property which for the purpose of valuation cannot be separated from other property and upon the true value of which the assessed value of that item must depend. In the latter case the change is rather formal than substantial, and as applied in the case before us, is like an error in arithmetic, clerical and not substantial. The tax is not increased, but is differently distributed, yet practically coming from the same fund, for whether paid directly by the bank out of dividends, as, under section 6 of the Laws of 1866 (supra), it

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plight have been, or by the stockholder directly, as in fact it was, would make no difference; in either case it would come out of his funds or credits, and the aggregate, whether imposed on real estate or on the shares, would be the same- and in no respect exceed his just proportion of the general-tax. But however that may be, it is apparent that the defendants, as commissioners, had jurisdiction over the person of the shareholder and over the subject of the tax. In dealing with the question brought before them they exercised a judicial function, and if in error, no action lies against them unless that error was perpetrated maliciously.

The judgment appealed from should therefore be reversed and a new trial granted, with costs to abide the event.

All concur, except Peckham, J., who dissents.