3 N.Y.S. 86 | N.Y. Sup. Ct. | 1888
The law requires that real estate be assessed at its full value, or, as it was formerly expressed, at the sum for which it would be appraised for the payment of a just debt by a solvent debtor. Many considerations must have a share in determining this value. Among them are actual sales of the property, or of similar property, and the earning capacity of the property itself. Ho one consideration is conclusive. All may be properly taken into account. Sometimes houses of large cost will rent for only a small interest on their cost and on their value in the market. Other kinds of real estate may bring a large income upon their cost and on their value in the market. So that to take the earning capacity as the sole measure would be incorrect, while yet it may properly have its influence. But there is one important rule: mortgages or liens on land are not to be deducted in ascertaining value. Hence it very plainly follows that if the earning capacity of real estate is to be considered at all, that capacity is not to be reduced by the interest payable on any mortgage. For instance, if, in estimating the value < of a lot and building, it appears that it rents for $2,500 a year, it is quite immaterial that there is a mortgage on the property on which the annual interest is $2,000. The earning capacity of the lot and building is just the same, whether there is a sole owner or several owners, and whether the owner lias a clear or an incumbered title. The assessment is on the property, and it is just as much when the property is incumbered for more than it is worth as when it is free. And so the rental value of the property is just the same, whether the whole rent goes to the owner, or whether he pays half or three-quarters of it to a mortgagee. These principles are perfectly clear, and there could be no doubt in regard to them when we consider farms, lots, buildings, and the like. Certainly, so far as may be, real estate belonging to a railroad company should be governed by the same rules. Some modifications in estimating earning capacity must arise. A piece of a railroad passing through a town is to be assessed. In assessing it the earning capacity may be considered. This earning capacity can hardly be ascertained except by reference to such capacity as it belongs to the whole road, and this view has been taken by the courts. In ascertaining such earning capacity it is, of course, proper to deduct operating expenses. But the point now urged by the appellants is that, in estimating such earning capacity of the whole road, the learned justice deducted from the total receipts, not only the operating expenses, but also the interest on the mortgage debt. And the appellants urge that this is
Landon and Ingalls, JJ., concur.