144 N.Y. 94 | NY | 1894
[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *96 This is an appeal from the order of the General Term, affirming the order of the Special Term, by which the assessment for the relator's capital for taxation for the year 1893 was vacated and set aside. The relator is a corporation organized under the law for the incorporation of gas light companies, with a capital of $4,000,000, fully paid in or secured to be paid, and whose place of business is the city and county of New York. In the annual record of the assessed valuation of real and personal estate in said city and county for the year 1893, was entered the sum of $5,000,000 as the value of the relator's capital liable to assessment. Thereafter, pursuant to the provisions of sec. 820 of the Consolidation Act of 1882, the corporation made application to the commissioners of taxes for a reduction and cancellation of the assessment, and presented to the board a verified statement, and its vice-president was orally examined by the commissioners in support of the application. The commissioners subsequently decided the application and reduced the assessment to the sum of $1,972,700. The relator being dissatisfied with the decision and claiming that upon the proof it had no assets subject to taxation in the year 1893, procured a certiorari under chap. 269 of the Laws of 1880, to review the proceedings of the commissioners, to which a return was made by them, and upon the hearing the order was made setting aside the assessment. The sole question relates to the jurisdiction of the commissioners of taxes to make the assessment of the relator's property as finally entered in the roll.
Section 4 of the act of 1880, under which the relator proceeded, provides that "if it shall appear by the return to such *98
writ that the assessment complained of is illegal, erroneous or unequal for any of the reasons alleged in the petition, the court shall have power to order such assessment, if illegal, to be stricken from the roll." The complaint is that the assessment was illegal for the reason that the relator had no capital subject to taxation in the year 1893. It was represented in the statement presented to the commissioners by the relator that its real estate, "as per sworn valuation of the deputy tax commissioner," was of the value of $1,515,400, and that its total personal property was of the value of $1,041,483.43, making the aggregate value of its whole property, real and personal, the sum of $2,556,883.43. In the items of its personal property is included patent rights and franchises valued at $500,000, and no claim is made that it was entitled to any exemption of any other part of its personal estate from taxation. The statement further represents that the debts of the relator were $2,839,192.98. It thus was made to appear that the debts exceeded the total assets in the sum of $282,309.55, or, in other words, that the relator was an insolvent corporation, and that its capital of $4,000,000, which had been wholly paid in or secured to be paid, had been wholly lost. But notwithstanding this condition of the relator's affairs, the statement contained the further representation that during the year 1892 the surplus earnings of the corporation over and above operating expenses, leakage, bad debts and depreciation of plant had been $331,777.25, out of which a dividend of eight per cent on the stock, amounting in the aggregate to $320,000, had been declared and paid by the company. The presentation of a statement showing that an insolvent corporation was doing, nevertheless, a highly successful business, and that out of its net earnings was able to pay a large dividend to its stockholders, naturally challenged inquiry. It was not asserted by the relator that it had sustained recent or large losses, and it gave no explanation of the apparent anomaly disclosed in a comparison of the several facts alleged in the statement. It also appears that the dividend declared in 1892 was not exceptional. A dividend at the same rate out of *99
earnings was declared and paid in 1891. The computation upon which the commissioners reached the result stated in the corrected assessment roll appears in the return made to the writ. They regarded the capital of $4,000,000 as unimpaired. From this sum they deducted $1,527,300, the assessed value of the real estate, and the further sum of $500,000, the value of the patents and franchises, which left $1,972,700, the sum which they fixed upon as the portion of the relator's capital liable to taxation. It will be observed that the assessors made no deduction of the debts from the amount of the capital stock. Debts are deductible in ascertaining the assessable value of the capital of a corporation. (People ex rel., etc., v. Barker et al.,
The statement contained nothing in terms upon the subject of the actual value of the relator's real estate. It stated the assessed value only. The theory of the statute is that real estate for the purpose of taxation shall be assessed at its full value. The rule formulated in the Revised Statutes is that "all real and personal estate shall be estimated by the assessors at its just and full value, as they would appraise the same in payment of a just debt due from a solvent debtor" (1 Rev. St. § 17; Laws 1851, ch. 176), and under the Consolidation Act (§ 814) it is to be assessed "at the sum for which such property under ordinary circumstances would sell." But it is well known that this duty cast upon assessors is seldom performed, and that the taxation of real estate throughout the state is generally upon an assessment which represents but *100
part of its actual value. Assessment at the full value is the exception and not the rule. If the ratio between the actual value and the value as assessed is uniform, no inequality of taxation would result, except, perhaps, in the distribution of the tax as between real and personal property, assuming that the assessors do not apply the same ratio in assessing personalty. Real and personal property are to be separately assessed. In case of an individual assessed for both, if the realty be undervalued, the loss cannot be made up by adding it to the assessment of the personalty. But the law governing the taxation of corporations (Laws of 1857, ch. 456) requires the valuation of the whole property owned by the corporation, whether real or personal, or both, in order to ascertain the capital which is the subject of taxation (People ex rel. Union Trust Co. v. Coleman,
We held in the case of People ex rel. Edison v.Commissioners of Taxes (
In the present case there were circumstances tending to create question. The extraordinary fact that the corporation, although by its statement insolvent, was paying large dividends out of earnings, has been adverted to, and no explanation is suggested. The statement also gave the assessed value of its real estate and left it to inference and presumption that this was its actual value. But the commissioners in compliance with the demand of the writ, set forth in their return the reasons upon which they acted. They referred among other things to the amount of paid-up capital, the earnings and dividends; the fact that the relator omitted to state the actual value of its stock, as required to do by the blank furnished by the commissioners, but substituted a different paper, and that it did not assert or claim that its capital stock was of less value than $4,000,000.
But the return states a still further ground for their decision. It avers in substance that the relator in 1891 and 1892 filed verified statements in respect of the taxes of these years, and that the commissioners had before them these statements, and the evidence of the relator's officers in proceedings brought to review the assessment of 1891, and the decisions of the Supreme Court and of this court ratifying the assessment of that year (66 Hun, 61; S.C.,
Enough has been stated to show, we think, that the commissioners were justified in distrusting the statement furnished by the relator as to the value of its assets in 1893. So far as it went the statement may have been true, but the omission to state the actual value of its real estate, and stating the assessed value only, afforded an opportunity to evade the real inquiry as to the value of the capital liable to taxation. It is true that the relator's capital may have been depleted by losses between 1891 and 1893, but this was not suggested and seems inconsistent with the continued business prosperity which justified so large dividends from large earnings. The commissioners had a right to act upon evidence outside of that furnished by the relator. In making inquiry and collecting the facts, they are not bound by the strict rules which govern ordinary judicial proceedings. If they act in good faith upon their best judgment, upon reasonable grounds, and they do not err in the principle of assessment to the prejudice of the taxpayer, their decision cannot be overruled.
We think the order of the Special and General Terms should be reversed and that the proceedings of the commissioners should be affirmed.
All concur.
Ordered accordingly. *104