127 N.Y.S. 918 | N.Y. App. Div. | 1911
Lead Opinion
The petitioner is a corporation duly organized and existing under the laws of the States of Hew York and Hew Jersey. It was formed December 1, 1906, by the consolidation of the Hudson and Manhattan Railroad Company and the Hew York and Jersey Railroad Company, which were incorporated under the laws of Hew York, and the Hoboken and Manhattan Railroad Company which was incorporated under the laws of Hew Jersey. It succeeded to the ownership of a special franchise granted by the board of rapid transit railroad commissioners on the 10th day of July, 1902, to the Hew York and Jersey Railroad Company for the operation of an underground railroad for the transportation of passengers and property for hire consisting of tunnels beginning at the bulkhead of the’North river at West street at a point nearly opposite Morton street, running thence through Morton, Greenwich and Christopher streets to a terminal in the block bounded by Christopher, West Tenth, Greenwich and Hudson streets; also to a similar special franchise granted by said board to the same company on the 2d day of February, 3905, for an extension of the line under Sixth avenue to Thirty-third street and under Ninth street to Fourth avenue, and it also succeeded to the ownership of a special franchise granted by said board on the 24th day of November, 1903, to the Hudson and Manhattan Railroad Company for constructing, maintaining and
Prior to the 15th day of March, 1909, the State Board of Tax Commissioners fixed and determined the value of all of this property, including the tangible property installed in the construction of the railroads, as special franchises for the purposes of taxation in the year 1909 at $8,000,000, and gave due notice to the relator of a hearing to determine any complaint it might desire to make concerning said assessment. Pursuant to such notice the relator by its president and counsel appeared before the board and protested against the assessment, claiming that it was excessive, illegal and erroneous, and filed objections in wilting, to the assessment and offered to answer any inquiries that the board might make, but none were made. The objections were based in part on the annual report made to the State Board of Tax Commissioners by the petitioner pursuant to law on the 30th day of January, 1909. That- report showed, among other things, that only a small portion of the railroad had been constructed and was in operation, and that the earnings thereof were insufficient to meet the operating expenses, taxes and interest; that the remaining parts of the tunnel and railroad were in an inchoate'and incomplete condition. For these reasons the objections showed that the relator claimed that the special franchises had no value for the purposes of taxation in excess of the rents reserved to the city thereunder, and that until the railroads were fully completed it would be impossible to estimate what they would
The petition for the writ sets forth these facts, and further shows that the board did not notify it to appear for any other examination or hearing; that as petitioner was informed and believed the board had no other evidence or information before it and that no other evidence was known to or considered by the board; that the evidence presented by the petition was uncontroverted and was accepted as sufficient by the board. Neither the sources of information nor the grounds, of belief of the petitioner with respect to these matters are stated and, therefore, the allegations are of no probative force. It appears that after the hearing the State Board fixed the value of the property herein described as special franchises at $8,000,000 and filed with the department of taxes and assessments of the city of New York a written statement thereof duly certified. That valuation has been duly entered on the assessment roll of the city of New York as the valuation of the property for the purposes of taxation as special franchises and the statutory steps required for the collection and enforcement of taxes against the relator based on said assessed valuation were being taken when this proceeding was commenced. The petition further shows that by the grants of said franchises by the board of rapid transit commissioners of the city of New York the method of .-fixing the valuation of said franchises was determined for the purpose of ascertaining the annual rental or compensation to be made to the city therefor and said grants are referred to and made a part of the petition and it is therein stated that copies thereof were filed with the State Board of Tax Commissioners by the petitioner with its said annual report. It is further shown in the petition that the petitioner was assessed by the commissioners of taxes and assessments of the city of New York for the same property for the same year at an assessed valuation of $1,700,000.
Its return does not show the theory upon which or the modus operandi by which the board determined the valuation. Theypetitioner might have obtained a further return which would haife disclosed the rule of valuation applied in making this assessnyent and the material evidence on which they acted. (People ex ref. Jamaica Water Supply Co. v. Tax Comrs., 196 N. Y. 39; People ex rel. Buffalo Gas Co. v. Tax Comrs., 199 id. 162 ; People ex rel. Lehigh Valley R. Co. v. Woodbury, Id. 167 ; People ex rel. N. Y., O. & W.
It is not only to be presumed that the assessment is valid but it must be sustained'unless the relator has shown on the hearing de nova, which it was entitled to and has had in this proceeding (People ex rel. Manhattan R. Co. v. Barker, 152 N. Y. 417), that it cannot be sustained on any theory or rule of valuation which the assessors might lawfully have adopted or applied, and if the evidence leaves the matter in doubt then it is the province of the assessing officers to determine the value and their determination cannot be disturbed. (People ex rel. Jamaica Water Supply Co. v. Tax Comrs.,supra; People ex rel. Burke v. Wells, 184 N. Y. 279 ; People ex rel. Osgood v. Comrs., etc., 99 id. 154.)
Neither the petition nor the evidence in the case at bar shows the value of these special franchises and, therefore, there is no basis for complaint that they are overvalued (see Tax Law [Consol. Laws, chap. 60; Laws of 1909, chap. 62] §§ 290, 293, as amd. by Laws of 1909, chap. 330), except possibly on the theory that it is to be inferred from the facts set forth that they had no value, and that is scarcely claimed, for the relator’s theory is that the value cannot be ascertained. It is, however, to be presumed that the board of tax commissioners performed their statutory duty in assessing the special franchises at their full value. (Tax Law, § 2, subd. 3, §§ 21,43, 45.) It was shown upon the hearing that the other real property on the same assessment roll assessed by the commissioners of taxes and assessments of the city of New York was assessed at only eighty-nine per cent of its true value. It would seem, therefore, that in any event the petitioner is entitled to have the assessment reduced to eighty-nine per cent thereof in order to equalize it with the other assessments. (People ex rel. Jamaica Water Supply Co. v. Tax Comrs., supra.)
As has-been seen, the relator contends that in so far as this property constitutes special franchises, it is not taxable for the' reason ; that it had taxable value on the second Monday of January, 1909, as of which day this assessment was made, and the claim is also made that the property derived from the State under the let
On the hearing at Special Term it was shown that' the permit to construct the bridge over Dey street was granted on the 26th day of June, 1907, and is revocable on sixty days’ notice. While it stands the relator is required to pay the city a fixed annual charge for the privilege of maintaining it. This was years after the special franchises to construct the tunnels were granted, and it has no direct connection therewith and cannot, we think, fairly be said to be any part of the special franchises. It does not clearly appear, however, that the bridge was considered by the State Board of Tax Commissioners as part of the special franchises. A paper referred to by counsel for the relator as the “ Tentative Assessment Roll ” /made
“ Tunnel crossing Dey Street,
“ Bridge “ “ “ .”
Printed at the head of this column is the following: “ Description of property by corporation,” which would seem to indicate that the description below in the column is the one given by the corporation itself in reporting its special ■ franchises to the board pursuant to the requirements of section 44 of the Tax Law. If the relator thus itself misled the taxing officer, surely it cannot be heard to complain. Moreover, it is highly improbable that the assessed valuation was increased on account of the permit to maintain the bridge. Therefore we deem that objection without merit.
On the hearing the president of the relator testified that on the 31st day of December,' 1908, its uptown line was completed' from Hoboken under the river to Morton street and under Greenwich and Christopher streets and Sixth avenue to Twenty-seventh street, and that it was in operation as far as Twenty-third street; that its uptown franchise at that time extended as far as Thirty-third street, and was projected beyond that under Sixth avenue to Forty-second street and through Forty-second street to Park avenue at the Grand Central Station, but that it did not obtain its franchise for this extension until May, 1909 ; that at the end of the year 1908 the downtown line was in process of construction ; that the two tunnels had been partly constructed from the Manhattan side toward the middle of the river and from the middle of the river toward the east, leaving a gap, however, in each, and that the lower subway on Manhattan island had in part been constructed, but no cars were running on the downtown line ; that the company commenced to carry passengers on the uptown line from Hoboken to nineteenth street on the 26th day of February, 1908, and as far as Twenty-third street a few months later; that the gross passenger receipts for that year on the entire line in Hew York and Hew Jersey were only $529,288.40; that the operating expenses for that year, not including taxes or any part of the fixed charges, were $494,147.31, leaving $35,141.09 of net earnings, against which would have to be charged interest on funded debt and taxes, and that it paid the city
If the assessment were on the tangible property only, it might be said that the evidence presented by the relator tends to show that the assessed valuation of its tangible property is probably at a higher proportionate valuation than that on those of the Pennsylvania Railroad Company and the New York subway; but neither the value nor the terms of the other special franchises is shown, and the evidence, therefore, is of little value. Moreover, if it could be determined from the evidence exactly the proportion, if any, that the special franchises of the relator are assessed above a few others, it is evident that it would not do to reduce the assessment on evidence merely showing that it was at a higher proportionate valuation than a few other assessments on the same roll, for in order to show that the relator is aggrieved it would be necessary to show that unless its assessment was reduced it would be obliged to pay more than its proportion of the taxes. (People ex rel. Warren v. Carter, 109 N. Y. 576; People ex rel. Fiske v. Feitner, 95 App. Div. 217, affd., 180 N. Y. 536; People ex rel. Stewart v. Feitner, 95 App. Div. 481.) The assessments with which the relator makes compari
The relator also called a real estate expert, who gave his opinion as to the value per square foot of land on the streets under which the relator’s railroad is constructed at different points. He then testified that in his opinion an easement for a tunnel such as that of the relator, if under private property, would be worth from fifteen to twenty-five per cent of the fee value of the land above the tunnel. We are at a loss to see how this evidence has any material bearing on the questions presented for decision.
The annual report of the relator made to the State Board of Tax Commissioners for the year ending December 31,1908, was offered and received in evidence. It appears by that report that the relator was required by the blanks furnished by the State Board of Tax Commissioners to state, among other things, the “ Present Value of Property in Streets, Highways, Public Places and Public Waters on Basis of Cost of Reproduction Hew,” and the present value thereof, allowing for depreciation, and also the cost of construction and the cost of equipment. The relator in answer to these requests stated that the tunnels, railroads, stations and terminals were in course of construction and equipment under construction contracts made by the constituent companies to whose rights the relator succeeded; that the railroads were not completed or in operation, “ with the exception of a comparatively small part of the said railroad between Hoboken, Hew Jersey, and Sixth Avenue and Twenty-third Street,” and that “ This situation precludes simple numerical answers to some of the questions in this printed form; ” that “ it is impossible to state the cost of the road and equipment, inasmuch as the work has not yet been completed; ” that the work done and property acquired have been done and acquired pursuant to construction contracts “ which call for a total consideration in bonds and stock for complete construction and equipment.” There was annexed to this report an affidavit of one of the chief engineers of the relator, giving the cost of reproducing the tangible property under the river in the uptown tunnel, less a specified all allowance for depreciation, as $797,401, and the cost of reproducing 'the tangible property in the uptown line under the streets
The said annual report of the relator also showed an authorized stock of $50,000,000, of which $15,311,508.38 was issued and outstanding in the hands of the public, and $28,535,116.62 was issued or to be issued to the contractor for construction and equipment; that there were outstanding $5,000,000 bonds issued by one of the constituent companies “ affecting a part of the property,” and that the relator had mortgaged all of its property to secure a bond issue of $100,000,000, of which $51,500,000 had been issued and were outstanding. No other evidence was offered by the relator bearing on the question of the value of the special franchises.
On behalf of the respondents, an experienced civil engineer, who had charge, in part, of the construction of the Pensylvania Railroad tunnels and the Belmont tunnel, and who for some time ■ had been and was then employed as the engineer of the State Board of Tax Commissioners, testified that the State Board valued the tangible property of the relator as of the second Monday of January, 1909, at $7,642,322, which was based on the cost of reproduction new; that he was familiar with the cost of such work and familiar with the condition of the work at that time, and in his opinion those were conservative figures, and that he made that estimate for the board.
The rule is well established that property should not be assessed for more than its full and true value, and if it be held and used for specific purposes in connection with other property not within the jurisdiction of the assessing officers, as a parcel of real estate forming part of a railroad company’s right of way, at what it would cost to reproduce it, for it cannot fairly be said to be worth more than it would cost to duplicate it. (People ex rel. D., L. & W. R. R. Co. v. Clapp, 152 N. Y. 490. See, also, People ex rel. W. U. Tel. Co. v. Dolan, 126 N. Y. 166, 175-177.) It does not follow that the cost of duplicating or reproducing property may be taken as the valuation for assessment in all cases, even though there may be no readily ascertainable market value for the purpose for which it is used by legislative authority. It is manifest that such basis would in some instances be erroneous, as where, for instance, an improvement has cost more than the improvement required should or would have cost. In the case at bar, while the cost of reproduction of the tangible property may not be controlling as to its value in' connection with the intangible property, yet in the absence of other evidence, owing to the inability or unwillingness on the part of the relator to furnish it as required by the State Board of Tax Commissioners pursuant to the provisions of section 44 of the Tax Law, we are of opinion that it is material evidence in determining the value of the special franchises. The stock and bond issue of this company and its agreement with respect to the annual rentals to be paid to the city show beyond question that the capitalists ■ who financed this enterprise confidently believed that it would be a great financial success. There is no evidence as to the market value of the bonds and stock. The actual value of the special franchises,
There is no force in the objection that the State cannot tax the relator on the special franchises granted by it, or by authority from
The State by letters patent issued on the 24th day of February, 1891, duly authorized by the Commissioners of the Land Office, granted to the Hudson Tunnel Railway Company “ a right of way one hundred sixty feet in width and forty feet in height within which to construct four tunnels for the use and operation of the railway of said company beneath the waters of the Hudson River, upon and along the route of said railway between” the city of Hew York and the city of Jersey City, as shown on a plan and profile filed in the office of the Secretary of State to which reference is made. The relator has succeeded to all of the rights of the Hudson Tunnel Company under said letters patent -and it has constructed the tunnels on the route and precisely in the place described therein. The questions presented on this appeal with respect to the effect of the letters patent and the estate or rights granted thereby are the same as those presented in People ex rel. Bryan v. State Board of Tax Comrs. (142 App. Div. 196). The decision of these questions on the appeal in that case, from which the writer dissents, requires that the claim of the relator that said tunnels are not assessable as part of its special franchises be overruled.
Since this opinion was written we have been furnished with a copy of an opinion in People ex rel. Hudson & Manhattan R. R. Co. v. Tax Comrs. (142 App. Div. 220), recently handed down by the Appellate Division in the Third Department on a review of a special franchise assessment on part of these tunnels and subways for the year 1908, and the views therein expressed appear to be in accord with our views as herein expressed.
It follows that eleven per cent of the assessment should be deducted in order to equalize the assessments with the assessments in general on the same roll, and as thus modified the assessment is confirmed, with costs to appellant.
The order should be settled on notice.
Miller, J., concurred; Clarke, J., concurred in result; Ingraham, P. J., and Scott, J., dissented.
Dissenting Opinion
This is -an appeal from a final order and judgment confirming the assessment by the State Board of Tax Commissioners of the special franchises of the Hudson and Manhattan Railroad Company for the year 1909.
The relator’s special franchise was valued at the gross sum of $8,000,000, and the return shows that this included a valuation of both the intangible right or privilege to occupy and use the streets, highways and public places for the business purposes for which the special franchise was granted, and the value of the tangible property erected or located therein and used in connection therewith considered together, but the return also shows that the Tax Commissioners made no separate valuation of the tangible and intangible property. It appears, however, from the evidence adduced by the respondents that-the value of the tangible property was taken at $7,642,322, which was the assumed cost of production. This leaves as the assumed value of the intangible property $357,678, but there is nothing whatever in the whole case from which it can be determined upon what' ground or basis this valuation was arrived at, since the respondents have failed to comply with the plain requirement of the statute that they shall include in their return a statement of the grounds of their valuation. (See Tax Law [Consol. Laws, chap. 60; Laws of 1909, chap. 62], § 292.) The relator might have compelled a further return complying with the statutes, but since it has not done so it becomes our duty to inquire whether the valuation can be sustained upon any legal basis. The situation and condition of relator’s property in January, 1909, as of which time the valuation was made, were peculiar and unusual, and add much to the difficulty of arriving at a just and equitable basis for valuing the special franchises. The relator was formed on December 1, 1906, by the consolidation of a number of prior existing companies, and succeeded to the special franchises previously granted by the board of rapid transit commissioners to its constituent companies. It was organized for the purpose of constructing and operating a railroad in tunnels under the streets of the city of Hew York and the waters of the Hudson river and in Hew Jersey, containing in all twenty-six and twenty-two one-hundredths miles of single tunnel. The uptown
Ingraham, P.. J., concurred.
Order modified as stated in opinion, and as modified affirmed, with costs to appellant. Settle order on notice.