48 N.Y.S. 641 | N.Y. App. Div. | 1897
The -following is the opinion of Beekman, J.:
I am not disposed to interfere with the conclnsioh of the commissioners that the. indebtedness of relator’s firm is to be regarded, to the extent at least of the value of the tobacco on hand, as having been contracted or incurred in the purchase of the same. While the methods adopted by the partners in the transaction of their business may render it difficult, if not impossible, to show that a specific sum was borrowed for the purpose of paying for a particular lot of tobacco, still the fact remains that the borrowed money which it was sought to offset against taxable property was obtained and used for the purpose of paying for tobacco of which about the same ■ amount of stock as that on hand had been carried by the firm for the two years preceding the assessment complained of. The loans obtained were sought and used for the purpose of supplying funds for the purchase of tobacco from time to time, and are to be regarded as debts contracted for the purchase of the tobacco in question, although at the time the money was borrowed it had not been bought and no liability had been immediately incurred on its account. The borrowed money constituted a continuing fund for the purchase and replenishing of the stock of goods which the relator’s firm carried from year to year. It was an indebtedness incurred originally and continued for the purpose of enabling them to purchase and carry their stock of goods,, and is, therefore, to be regarded as a debt or liability incurred in the purchase of the property on hand within the meaning of the statute. It is too narrow a construction to hold that the statute refers only to the immediate debt to the vendor for the purchase money. It includes as well a debt incurred upon the borrowing of money .from another with which to pay the vendor. If the view is to be adopted that the money so borrowed should be regarded only as an indebtedness incurred ,for the purchase of the tobacco first bought and paid for out of the proceeds of the loan, an easy method is at • once discovered by which the statute may be completely nullified. Upon the sale of such tobacco the proceeds, instead of being used for the discharge of the loan, would be employed in the purchase of other goods, and the loan still continuing could be set off against taxable property on the ground that it was not specifically. contracted for
Considering then the proportion of the indebtedness incurred by relator’s firm which is equivalent to the book value of the. tobacco on hand as not deductible from the taxable assets, within the meaning of the statute, it becomes necessary to consider the constitutional question raised by the relator. The statutory provisions which are involved are embodied in section 1, chapter 202 of the Laws of 1892.
The further contention of the relator, that the statute is confined . to cases where the indebtedness was incurred in bad faith for tlie purpose of evading taxation, is hardly tenable. It separately enumerates, in a disjunctive form of statement, several classes of debts whiph may not be deducted. The last of these are debts “ contracted or incurred for the purpose of evading taxation.” It hardly requires any discussion to show that this does not qualify the preceding clauses, but is a separate and distinct classification without any modifying influence or effect upon what precedes it. As it does not appear that the tax commissioners have committed any error in making the assessment complained of, the writ must be dis- • missed, with costs.
Amending section 9 of article 3, title 3, chapter IS, part 1 -of the Revised Statutes.— [Rep. .