People ex rel. Seth Thomas Clock Co. v. Wemple — 42 N.Y. St. Rep. 60

Majority

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The People ex rel. The Seth Thomas Clock Co. v. Edward Wemple, Comptroller.

(Supreme Court, General Term, Third Department,

Filed December 5, 1891.)

Headnote

1. Taxes—Corporations—Exemption.

Relator is a foreign corporation doing business in this state, having itsmanufactory in Connecticut and its principal place of business in New York. city. It has done some manufacturing in New York, probably in finishing the products sent here, which amounted to about two per cent, of its entire product. Held, that it did not carry on manufacture within, this state, within the meaning of the statute, so as to exempt it from tax.

3. Same—Capital stock.

In fixing the amount of capital stock employed here on which to levy the tax, the comptroller assumed that it bore the same proportion to the-whole capital stock that the sales in this state bore to the total amount of sales. Held, that in the absence of evidence that the amount so fixed was. erroneous the comptroller’s decision would not be disturbed by the court.

Certiorari to review the decision of the comptroller of the-state assessing a tax of $5,606.51 upon relator, a foreign corporation doing business in this state, based upon the value of its capital stock employed in this state during the eleven years from 1880 to 1890, both inclusive. The relator, after the taxes were-assessed by the comptroller, applied to him for a revision and readjustment of the same, claiming that it was not liable to taxation,, or, if liable to any tax, the tax imposed was excessive. The-comptroller re-examined the matter, and thereupon declined to make any revision or readjustment.

Rodman & Cogswell, for relator; I. H. Maynard, Deputy Att’yGen., for comptroller.

Chapter 542, Laws 1880, § 3, provides that “ Every corporation * * * incorporated or organized by or under the laws of any other state or country and doing business in this state, except * * * manufacturing corporations carrying on manufacture within this state, * * * shall be subject, to and pay a tax as a tax upon its corporate franchise or business-into the treasury of the state annually,” etc. This section of the act was amended by chap. 361, Laws 1881, and chap. 359, Laws-1885, but not so as to affect the application of the above language to the relator in the particular first to be considered, namelyDid the relator, in addition to doing business in this state (as to which there is no question), also carry on manufacture within this state during all the years from 1880 to 1890, both inclusive? The relator was organized in 1853 under the laws of the state of Connecticut, and during the years in question was extensively engaged within that state in manufacturing clocks and watches. Its plant, and machinery for the purpose are and always have been situated in Thomaston, in the state of Connecticut. Its manufacturing done there has averaged a yearly product valued at from $500,000 to $700,000. At the same time it has had its principal sales rooms and office in the city of New York. Its sales in and from its New York rooms have exceeded in amount and value all its sales, in and from all its other sales agencies. A large part of the sales.

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however, are made by means of samples, and the goods are in such case delivered from the manufactory in Connecticut. The-relator has at the same time done manufacturing in New York of the yearly amount of from $16,000 to $20,000, but of what character or upon what basis computed does not appear. This manufacturing probably consists in some incidental additional work to-the manufactured product forwarded from Connecticut to New York, such as may conveniently and suitably be added at the place where the manufactured product is exposed for sale. It is about two per centum of the whole product, and less than four per centum of the amount sold in and from New York.

The statute in question should have such reasonable construction as will give effect to the legislative intent. As was said in People v. Horn Silver Mining Co., 105 N.Y., 76 , 82; 6 St. Rep., 495 , in which a similar question was presented, in order to give such effect the ordinary meaning of the phraseology employed in the act may be enlarged or restricted. It was there also said that, “ In exempting such corporations from taxation under the act the. legislature-may be supposed to have been influenced by two things ; a desire-to encourage manufacture within the state, and the fact that a corporation carrying on any business within the state would necessarily have visible tangible, property liable under the general laws of the state to taxation.” It certainly could not have been intended that a foreign corporation doing so large a business-within the state in the sales of its product, and so small a part of the work of manufa,luring it, could by its technical and nearly colorable act of “ carrying on manufacture within the state,” be entitled to the exemption which was intended to secure to the state the benefit resulting from a substantial compliance with the terms of the statute.

We think the relator is not within the exemption. By the terms of the act, “ The amount of capital stock which shall be the basis for tax under the provisions of § 3 of this act * * shall be the amount of capital stock employed within this staté.”

The comptroller fixed for each year the amount of such capital stock employed within the state. It is claimed that his valuations were excessive. He made them principally from the facts stated in the reports of the relator, made by it under protest. It appears that up to 1884 the paid up capital stock of the relator was $500,000, and thereafter $600,000. The comptroller ascertained the entire sales of the relator for each year; the proportion thereof made in and from New York; the amount of the stock in trade carried in each year by the relator in that city; the rentals paid for accommodations there, and its average monthly balances in the New York banks. It appeared that most of its business was directed from its New York office. The result reached by the comptroller indicates that he fixed the capital stock employed in New York by assuming that the capital stock employed within this state was in proportion to the whole capital stock as the amount of sales made in this state was to the total amount of sales. We do not suppose that this is absolutely right; the best the comptroller could do was to make it approximately right. The relator

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made application under chap. 463, Laws 1889, to the comptroller to revise and readjust the tax. As we construe that act, it was competent for the relator then to submit to the comptroller evidence that the amount of the capital stock employed within this state was erroneously fixed in the comptroller's account. This was not done; that is to say, no evidence additional to that upon which the comptroller had previously acted was submitted. Perhaps this omission was due to the fact that the statute was new and the practice unsettled. The finding of the comptroller upon a question of fact within his jurisdiction is like the verdict of a jury, and although the statute last cited authorizes us to review it upon the facts, we must do so within the limitations prescribed by the Code, § 2140, subds. 4, 5. People v. Wemple, 60 Hun, 225 ; 38 St. Rep., 17 . Without declaring that we think the amount of capital stock employed in this state was accurately fixed by the comptroller, we uphold his finding because we cannot clearly ascertain from the evidence that it was wrong.

Determination of the comptroller .affirmed, with fifty dollars costs and disbursements.

Learned, P. J., and Mayham, J., concur.