People ex rel. Glenn's Falls Insurance v. Ferguson — 5 Trans. App. 347

Majority

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THE PEOPLE ex rel. GLENN’S FALLS INSURANCE COMPANY v. HENRY FERGUSON et al., the Assessors of Queensbury.

Headnote

Certiorari—Assessments— Corporations— Capital.

Under the statutes respecting assessments, passed in 1853,"-‘arid also in 1857, insurance and other corporations are to be assessed upon the "actual value of their capital; and in determining the value of the capital stock, allowance must be made for their contingent liability on their policies which are outstanding.

A refusal on the part of assessors to make deductions-for-such contingent liabilities, is an error which may be corrected by certiorari.

This was a common law certiorari to review the action'of the assessors of the town of Queensbury,and compel them- to strike from the assessment roll of said town, for 1866, an assessment for personal property," ahd " an entry on the assessment roll of personal property erroneously omitted in 1865. Instead of a return, the case has been argued upon h"statement-agreed'upon as the facts,"With a stipulation for the entry of judgment.

The case presents two questions-for consideration:

1. Was the entry on the assessment roll of $30,000, as for

personal property,-alleged to have been-' erroneously omitted from the roll-Of'1865, authorized ?

2. Was the-assessment- for $40,000, as for personal property; legal?

The first question was decidéd in favor of the'EeMórs" by the General Term, and as no- appeal is taken from that decision by the assessors:, the point does not arise in this Court, and the statement of facts respecting the same is- omitted- here: ‘ "

Second. Upon" the liability of the Eelators to an assessment-of $40,000 for personal property, the -facts are theséThe capital of the corporation is $100,000, all of which is paid in, ahd its surplus profits is $141,932.55; 'making, in- all;, '$241,932.55.-'

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Its assets are the following :

U. S. securities.................... $160,400 00

Bonds and mortgages................ 36,305 56

Hew York bounty loan............. 3,000 00

198 shares bank stock.............. 9,900 00

Cash on hand and in bank.......... 19,575 59

Cash due from agents............... 7,251 40

Real estate, office, &c.............. 5,500 00

-$241,932 55

Of these the following are exempt from taxation, or are otherwise taxed, viz.:

Bank stock........................ 9,900 00

And the following items are to be deducted, viz.:

Losses unpaid..................... 9,642 00

10 per cent, on its capital........... 10,000 00

-$195,442 00

Leaving, after these deductions $46,490 55

It further appeared that there were outstanding policies of insurance, in full force, exceeding in amount $22,000,000, on which the premiums had been received and included in the assets of the company, and that it would cost $80,000 to reinsure such outstanding risks. It was also shown that said corporation made a dividend of 10 per cent, last January, which was the first dividend it had ever made; that there had been some sales of its stock just prior to such dividend, at ten or twelve per Cent, premium, which was the highest price ever paid for said stock, or for which it had ever sold; that since said dividend there had been several sales, but none at a higher price than par value, together with interest added from date of dividend to time of sale. The assessors refused to make any allowances on this account, but assessed the company upon the sum of $40,000. In

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theh appeal to the General Term of the Fourth District, this decision was affirmed, and the Delators now appeal to this Court.

S. Brown for Appellants.

jIsaac Mott for Bespondents.

Prior to the year 1853 moneyed corporations were assessed upon the amount of their nominal capital, whether its value in fact was more or less than its nominal amount (People v. Dolan, 36 N. Y. R. 62). In that year, and again in 1857 (Laws 1857, 2d vol. p. 1), the statute was amended, so that the assessment was made upon the capital stock and its surplus profits exceeding ten per cent., “ at its actual value.” The principle of assessing upon the actual value of the stock, instead of its nominal amount, was then introduced (auth. sup.).

The rule of assessing individuals upon their personal property is expressed in different language. It is in these words : “ The full value of all the taxable personal property owned by such person, after deducting the just debts owing by him ” (1 R. S. 391). The assessors, and the General Term, held that these two provisions furnished substantially the same rule. They held that the contingent liability of the company was not a debt owing by it, and that no deduction could therefore be made from the assessment on that account. I agree that this liability was not a debt owing by the company, and that if the same facts had been presented in behalf of an individual, he would not have been entitled to the deduction now claimed. If it is a debt, to whom is it owing ? If a debt, what is its amoimt in figures, and upon what: policy has it accrued 1 It is impossible to answer these questions, because, in fact, there is no present debt to any one.

I do not, however, agree in the conclusion of the Supreme Court, that therefore there can be no deduction on account of this circumstance. These questions are pertinent and conclusive in the case of an individual. He is entitled to deduct only the “ just debts owing by him.” As to him, there must be a creditor to whom the debt is owing, an amount certain, or capable of being reduced to certainty, and a contract or judgment upon

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which. a debt arises. Hot- so, however, as to a corporation like that, in-question..- The:rule of.!assessment there is “the actual value ” of the capital. If a corporation or an individual has an actual estate in possession of $100,000,. and is liable as guarantor, or indemnitor, or endorser, or hail, for $50,000, and the principal in, all -these liabilities is insolvent, so.fhat he will -certainly have to pay. the $5.0,000,-is not the actual: value of his estate reduced by that, amount? -. Truej:h.e-cannot he. said to owe that amount until the lapse of time, or a notice of non-payment, ,or some other occurrence.will entitle some, other party to commence an action against him, .His, actual -estate, however, is reduced. in-value by just .-.that amountí ;-Ho; assessor or. individual could justly -say. that, “the actual value” of -his , estate, subject to these • contingencies, was as great as it - would t be if free, .and -clear- from them.- Ho man would- give.-him as much for .his. estate, subject to these claims; as if there were no such claims. .-Whether tested by the standard of., market or .selling value, or by what it- will ultimately produce.to the possessor, the contingent-liabilities make a reduction of value. (Oswego Starch Co. v. Dolloway, 21 N. Y. 458 ). I think, it was-, an error in the- assessors to-refuse to make these deductions: There was no. practical difficulty in-reaching a result by the.aid of authentic tables, and by such evidence as long-, established -insurance.-companies.- can readily furnish.: It rvas -the duty of the assessors to act upon the evidence before them, and to adjudge.how much the actual value, of -the stock .was reduced by these contingent - liabilities, and to-deduct from-the: assessment accordingly. ' ; -

■ The-evidence; as. presented, showed that-the. reduction would more than equal the surplus as-found by the- assessors, .-and there was..nothing, in contradiction or. disparagement of this evidence Their.action is judicial, and -to he.-governed.-by .the evidence before them.- • All - the-evidence before them in the present case showed that., there was a contingent liability sufficient to absorb all the- surplus, and I. see nothing to cast-do.ubt or suspicion upon it.-. The assessors should -have decided in accordance with the evidence-.(People v. Reddy, 43 Barb, 543 ; Oswego S. Co. v. Dol

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loway, 21 N. Y. R. 1,60). There is nothing in the case to indicate that the roll is not still in the hands of the assessors; and they may yet correct their error by striking out the assessment of $40,000 for the year 1866.

The judgment should be reversed, and the assessors ordered to correct the roll by. striking out said sum of $40,000, assessed to the Appellants for the year 1866.

Reversed.

JOEL TIFFANY,

State Reporter.