People ex rel. Davis Colby Ore Roaster Co. v. Campbell — 48 N.Y. St. Rep. 817

Majority

p. 817

The People ex rel. The Davis Colby Ore Roaster Company v. Frank Campbell, Comptroller.

(Supreme Court, General Term, Third Department,

Filed November 22, 1892.)

Headnote

1. Gpkpokations—Taxation undeb chap. 543. laws op 1880.

To justify the taxation of a domestic corporation under chap. 543, Laws of 1880, and the acts amendatory thereof, there must be some property belonging to it, or some business done by 'it, within the state, and the tax must be proportionate thereto.

p. 818

2. Same—Money in bank—Basis for tax.

Where the only property within the state, of a domestic corporation doing its business without the state, was a small sum on deposit in a bank, Held, that the amount in the bank was the proper basis for the tax.

Certiorari to review the determination of the state comptroller in declining to set aside a tax assessed upon the relator, a domestic corporation.

R. Burnham Moffat, for relator ; Simon W. Rosendale, att’y-gen’l, for def’t.

The relator is a corporation duly incorporated under the laws of the state of New York for the year 1848, chapter 40; its certificate of incorporation stated that its principal place of business was to remain in the city and county of New York, and that the operations of the company were to be carried on in the city and county of New York, and in such other places within and without the state of New York as the best interests of the company might thereafter determine.

It was thus a domestic corporation, and was liable to pay a tax upon its franchise and business, to be measured by the amount of its capital stock found to be employed in this state. People v. Wemple, 129 N. Y., 558 -62; 42 St. Rep., 400 . During the year 1891 it moved its office for the transaction of business to the state of Pennsylvania. It made no sales within the state of New York during that year, it manufactured nothing within the state, it occupied no premises, paid no rent, employed no men within the state during the year. It did do business outside of the state of New York during that time; it manufactured ore roasters, kept a bank account, and employed servants and paid them, outside of the state; and business done outside of the state in that way constitutes no part of the capital stock employed within the state. People v. Wemple, 133 N. Y., 323 , 328; 45 St. Rep., 234 .

The same things, if done within the state by a corporation incorporated in some other state, would have constituted doing business within this state, and upon which such foreign corporation could have been taxed by this state. People v. Wemple, 131 N. Y., 64 ; 43 St. Rep., 963 ; People v. Horn Silver Mining Co., 105 N. Y., 76 ; 6 St. Rep., 495 .

If, then, a portion of the capital stock was employed without the state of New York, certainly all of it could not have been employed within the state of New York, and yet the defendant has assessed the relator upon the full amount of its capital stock; this I think was error.

A portion of the capital stock being employed elsewhere it could not be taxed as employed within this state.

It seems to me that in determining the amount of capital stock employed in this state the same principle applies to a domestic as to a foreign corporation. If a corporation has no property and no business within the state, then there is no basis upon which to compute the tax. People v. Wemple, 133 N. Y., 323 -9; 45 St. Rep., 234 .

Concurrence

p. 819

There must be some property or business done within the state to 'justify a tax, ,and there must .be some evidence to show how much capital is employed, and if there is such evidence the court will hesitate to disturb the finding of the comptroller; but that determination must be supported by some -evidence, it must not be a purely arbitrary determination! Having seen that the determination of the comptroller in taxing the entire capital stock of the relator was wrong, we must then see what evidence there is by which we can determine how much it should be taxed..

The evidence discloses no business done within this state, and the only property disclosed is the sum of $1,391.63 in money, deposited with a banking house in the city of New York. The amount in bank was held a proper basis for determining the tax in People v. Wemple, 129 N. Y., 558 ; 42 St. Rep., 400 . How that money or any portion of it was paid out, or for what purpose, perhaps is of nq consequence; whether any portion of it was used to pay past due dividends-1 do not think can be considered here as the case stands. The amount in the bank seems to be the only property that can be .used, as a basis to determine the amouht of the tax, and the tax upon that would be the sum of $7.65.

The determination of the comptroller should be reversed, the tax upon the relator 'fixed at the sum of $7.65, with fifty dollars costs and printing and other disbursements to the relator.

Mayham, P. J., concurs.

I concur in conclusions reached in foregoing opin> ion generally, but am not clear that relator might not be taxed for the two months of the fiscal year that its office was in the city of New York. See People v. Wemple, 18 N. Y. Sup., 513 : 44 St. Rep., 702 .