161 N.Y. 195 | NY | 1900
[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *198 [EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *200 The Cornell Steamboat Company is a domestic corporation engaged in the business of towing vessels upon the Hudson river and adjacent navigable waters, and having its office in the city of Kingston. In the year 1898 the assessor for that city assessed the relator for personal property the sum of $250,000 in addition to its real estate. Written objections to the assessment for personal property were filed with the assessor by the relator, together with a statement of the property and assets of the company. Subsequently the testimony *202 of the president of the company was taken by the assessor, from which it appeared that the value of the relator's property was as follows:
Steamboats .................................. $550,000.00 Real estate ................................. 149,200.00 Amount due from persons ..................... 131,721.44 Cash on hand ................................ 18,193.87 Materials and supplies ...................... 11,637.83 Machinery and tools ......................... 30,000.00 ___________ Total ...................................... $890,753.14 Deduct amount due others ....... $96,301.37 Mortgage indebtedness .......... 700,000.00 Real estate .................... 149,200.00 ______________ 945,501.37 ___________ Leaving a deficiency of ................. $54,748.23
It also appeared that the capital stock of the corporation was $750,000, and that out of the earnings of the company a dividend has been paid annually of six per cent upon its capital stock, together with the interest upon its bonded indebtedness. It also appeared that in 1893 the relator purchased the boats, franchise and business of another company, for which it paid $300,000, and at that time increased its mortgage indebtedness from $400,000 to $700,000. With reference to this transaction the president of the company testified that he regarded the franchise and business purchased worth more than the boats; that he did not regard the franchise given to a steamboat company by the state of any value whatever except as a form under which to do business; that it did not convey any exclusive privileges as in the case of a railroad, but simply admits an organization by which people can join together and do business under a state law, and in stating the value of the franchise purchased he wished it to be understood that he regarded it as depending solely on the good will of the business concern purchased.
It is now contended, on behalf of the assessor, that in making *203
the assessment for personal property he had the right to assume from the fact that the company paid a dividend annually of six per cent that its capital stock remained unimpaired. It must be conceded that the assessor had the right to avail himself of such assumption in determining the amount which should be assessed for personal property. This right has been distinctly recognized in the cases of People ex rel. Equitable Gas Light Co. v. Barker
(
The power of the Supreme Court to review assessments, given by section
A question has arisen as to whether there is any authority in law for a deduction of the debts of a corporation in assessing its personal property for town, county and municipal purposes. Upon this question able briefs have been submitted by counsel, in which is disclosed a history of the tax laws from *204
the beginning of the nineteenth century. We have not thought it necessary to enter upon an extended review of former statutes, for, to our minds, the answer that should be given to the question, under existing laws, is reasonably clear. It must be conceded that the Tax Law of 1896 does not, in express terms, direct the deduction of debts of corporations in assessing their personal property, but that such a deduction was intended by the legislature we have no reasonable doubt. Under prior laws they were deductible, as this court has repeatedly held. (People exrel. G.F. Ins. Co. v. Ferguson,
Section 21 of the present Tax Law, prescribing the duty of assessors, provides that "They shall prepare an assessment roll *205
containing five separate columns, and shall, according to the best information in their power, set down: * * * 4. In the fourth column the full value of all the taxable personal property owned by each person respectively after deducting the just debts owing by him." Section 37 provides that "When the assessors, or a majority of them, shall have completed their roll, they shall severally appear before any officer of their county, authorized by law to administer oaths, and shall severally make and subscribe before such officer an oath in the following form: `We, the undersigned, do severally depose and swear * * * that the said assessment roll contains a true statement of the aggregate amount of the taxable personal estate of each and every person named in such roll over and above the amount of debts due fromsuch persons, respectively, and excluding such stocks as are otherwise taxable, and such other property as is exempt by law from taxation, at the full value thereof, according to our best judgment and belief.'" It will thus be seen that, under section 21, we have express statutory authority for deducting the debts owing by persons, in the making up of the roll, and that under section 37 we have a statutory oath prescribed, in which the assessors are required to swear that they have deducted such debts. Under the Statutory Construction Law (§ 5) "The term person includes a corporation and a joint stock association." Considering sections
But with section
So treating it, the other provisions alluded to are in harmony. Reading the Statutory Construction Law in connection with sections 12, 21 and 37 of the Tax Law, we find that the statute affords a simple method for the taxation of corporations, as well as individuals, providing for a deduction of the debts that are owing by either.
It is further contended on behalf of the assessor that the entire bonded indebtedness should not have been deducted from the value of the personal property in this case. The testimony upon this subject is undisputed, and we are, therefore, of the opinion that a question of law is presented. It appeared, as we have seen, that in 1893 the bonded indebtedness was increased from $400,000 to $700,000, and that this increase of the indebtedness was made for the purpose of purchasing the boats and good will of the business of another company. The evidence fails to show the precise amount that was paid for the boats of the company, or how much was paid for the good will of the business. The parties to the transaction, doubtless, did not know themselves; for, as we understand, the purchase was for a lump sum of $300,000, and that included the good will of the business with the tangible property. The president of the relator, however, in his testimony, after fixing the value of the boats owned by the company at $550,000, which included the boats purchased in 1893, stated that in making that purchase he regarded the good will of the business as worth more than the boats. This testimony, we think, permits us to properly treat as a fact in the case that at least one-half of the increased bonded indebtedness created in 1893, to wit, $150,000, was contracted for the good will of the business of the company then purchased by the relator.
Section six of the Tax Law provides that "No deduction shall be allowed in the assessment of personal property by reason of the indebtedness of the owner contracted or incurred *210
in the purchase of non-taxable property," etc. Good will, like a franchise, is a privilege which the courts will protect as a right of value. As such it is property, though intangible. Under the Franchise Tax Law of corporations it is taxable with the franchise as forming a part of the value of the share stock. (People ex rel. A.J. Johnson Co. v. Roberts,
By deducting from the value of the assets the sum of $550,000, instead of $700,000, as the amount of the mortgage indebtedness, we have remaining the sum of $95,251.77 as the value of the relator's personal property, for which sum it should be assessed.
The orders of the Appellate Division and of the Special Term should be modified so as to reduce the assessment to the sum above designated, and as so modified affirmed, without costs of this appeal to either party.
All concur (PARKER, Ch. J., in result).
Ordered accordingly.