People ex rel. Cochrane v. Coleman — 38 N.Y. St. Rep. 118

Majority

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The People ex rel. John W. Cochrane, Adm’r, Resp’t, v. Michael Coleman et al., Com’is of Taxes, App’lts.

(Supreme Court, General Term, First Department,

Filed May 15, 1891.)

Headnote

Taxes—Exemption—Foreign capital.

Foreign capital sent to this state for investment is exempt from taxation whether invested or uninvested. The fact that the owner has died and an ancillary administrator has been appointed does not affect that question, nor does the form in which the capital has been invested.

Appeal from an order of special term vacating assessment on personal estate on the ground that the property in relator’s hands was exempt from taxation.

William H. Clarke, for app’lts; Evarts, Choate & Beaman, for resp’t.

We are of the opinion that the case of The People ex rel. Ferrer v. Commissioners of Taxes, 42 Hun, 560 ; 4 N. Y. State Rep., 471; affirmed in 105 N. Y, 629 ; 7 N. Y. State Rep., 871, covers this case. In that case, one William Maden, who resided in Cuba, died, having, at the time of his death, on deposit with a firm in this city a large sum of money, which had been placed by him in their custody for investment The relator, who had duly qualified as executor in Cuba, in order to get possession of the property so deposited, took out ancillary letters in this state and thereafter demanded the money from the firm with whom it was deposited, who refused to pay it over.

He was assessed by the tax commissioners for the amount in the hands of the depositaries as personal property, but it was held that as the fund was sent here for investment by the deceased, the property was exempt from taxation under the provisions of § 5 of the Revised Statutes, page 389, as amended by chap. 176 of the Laws of 1851, and § 3 of the Revised Statutes, page 419. See 2 R. S., 1094 and 1160, Banks 8th ed.

. The object of these provisions was clearly stated by Rapallo, J., in the opinion of the court of appeals in Williams v. Board of Supervisors, 78 N. Y, 561 . He says, referring to the foreign investor': “ Nothing can be more plain than the policy and purpose of these exemptions. They are clearly intended to further the trade and commerce of the state, and to encourage, and even invite, the sending of foreign capital here for investment. It is argued, however, that the exemption as to capital continues only so long as it remains uninvested, and that when invested, if the securities remain in the hands of the agent they are taxable. If such were the true construction of the provision it would be quite ineffectual, and rather a lure than a protection to foreign capitalists who might send their capital here to be invested under the assurance that it should be free from taxation.” * * *

“ These provisions are clearly designed to afford to the foreign capitalist who invests his funds here every conceivable protection. His capital cannot be taxed while awaiting investment. If the securities are taken by him out of the state, he may with impunity send them back to an agent here for the collection of principal or interest And if, instead of being removed from the state, they are deposited here with an agent for collection, they are equally free. The capital is protected from taxation whether invested or uninvested, and whether the securities are taken away, or remain here for collection.”

If the property involved in this case had been assessed in the lifetime of the' decedent, it certainly could not be contended that the assessment could be sustained. The death of Mr. Smith, and the appointment of the relator as his ancillary administrator, did not work any change. The property still remained as part and parcel of the estate of Smith, which had been sent here for employment and investment within the meaning of the provisions of the statute above referred to, and the question before us is to be disposed of the same as if the assessment had been made in the lifetime of Smith. In the brief presented by the appellant’s coun

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sel, it is sought to draw a distinction between this case and the case of the People ex rel. Ferrer v. Commissioners of Taxes, above referred to, on the ground that there it appears that a certain portion of the property on deposit was intended to be invested in United States securities and would, therefore, be exempt from taxation. Upon reading that case, however, it will be seen that although that fact is stated as one of the reasons for rendering the judgment there pronounced, the case is placed upon the broad ground that as the property was here awaiting investment, it was exempt from taxation.

It is quite clear from an examination of the case of Williams v. Board of Supervisors, that the form in which the capital of the foreign investor is invested can make no difference. See 78 N. Y, 566 and 567.

■ The order of the court below must, therefore, be affirmed, with costs and disbursements to the respondents.

Van Brunt, P. J., and Daniels, J., concur.