101 N.Y.S. 184 | N.Y. App. Div. | 1906
The franchise tax imposed under section 182 of the Tax Law (Laws of 1896, chap. 908) is not a tax upon the earnings or property of the corporation, but in the case of either a foreign or a domestic corporation is upon the “ mere intangible right to exercise a franchise.” (People ex rel. United States Aluminum P. P. Co. v. Knight, 174 N. Y. 475, 485.) In that case such a tax against a foreign corporation, computed upon the value of letters patent issued by the United States government, was sustained, the court laying down -the’ rule that the value of property exempt under the laws of the United States may be used as a basis for computing the amount of the tax, referring to ’the fact that while the United States government is not taxable by a State, a transfer tax may be computed and collected on account of a legacy to it, for the-reason that the -tax is not upon the legacy, but the right of succession. In People ex rel. Pennsylvania R. R. Co. v. Knight (171 N. Y. 354) the question was not decided, 'but it is evident that the court'was of the opinion that a franchise tax under this section of the statute might be computed upon the gross earnings of a foreign corporation from interstate commerce. In People ex rel. Hatch v. Reardon (184 N. Y. 431) the unanimous opinion of the Court of Appeals seems to tend in the same direotian. Therefore, even if the business of the relator was interstate or foreign commerce, that furnishes no valid objection to this tax.
But it is unnecessary to determine whether the -floating elevators were engaged in foreign or interstate commerce, or in a domestic business, for the.reason that -the use by the relator of the two barges
The relator, therefore, has no just cause of complaint'against the determination of the Comptroller, except that it appears that in determining the amount of capital within the State he included the amount of $100,000 of government bonds which was not capital employed within the State but was an investment of surplus earnings of the company which had been accumulated in good years to.be used if necessary in lean years. These surplus earnings should not have been considered in determining the amount of the tax. (People ex rel. Singer Mfg. Co. v. Wemple, 150 N. Y. 46; People ex rel. United Verde Copper Co. v. Roberts, 156 id. 585.)
The determination of the Comptroller, therefore, should be modified by deducting therefrom the amount of-$115.03, the amount of tax computed against-such surplus earnings, and as thus modified is confirmed, without costs.
All concurred ; Cochrane, J., in result; Parker, P. J., not sitting.
Determination of the Comptroller modified as per opinion, and as modified confirmed, without costs.