189 A.D. 347 | N.Y. App. Div. | 1919
The question presented by this appeal is whether the franchise assessment of the Second Avenue Railroad Company was properly made under the first sentence of section 185 of the Tax Law, or whether the same should have been made under the second sentence of that section. The Second Avenue Railroad Company is the owner of certain street railroads and of certain franchises for the operation thereof. On the 28th day of January, 1898, a lease of said railroads, excepting its franchise as a corporation, its shares of capital stock, and its rights reserved under that agreement, was
Section 185 of the Tax Law as it existed prior to June 1, 1917, was as follows: “ Every corporation, joint-stock company or association owning or operating any elevated railroad or surface railroad not operated by steam shall pay to the State for the privilege of exercising its corporate franchise or carrying on its business in such corporate or organized capacity within this State, an annual tax which shall be one per centum upon its gross earnings from all sources within this State, and three per centum upon the amount of dividends declared or paid in excess of four per centum upon the actual amount of paid-up capital employed by such corporation, joint-stock company or association. Any such railroad corporation whose property is leased to another railroad corporation shall only be required under this section to pay a tax of three per centum upon the dividends declared and paid in excess of four per centum upon the amount of its capital stock.” It seems to have been the legislative intent for the purpose of imposing a franchise tax upon such corporations to divide them into two classes: First, those engaged in the actual operation- of such railroads, and second, those not engaged in the actual operation, but whose property is operated by another railroad corporation under a lease.
It is true the property of the Second Avenue Railroad Company was leased to the Metropolitan Street Railway Company, but the property was not operated by the receiver of the lessee but by the receiver of the lessor who received the gross earnings.
As between the State and the relator the lease by the Second Avenue Railroad Company to the Metropolitan Street Railway Company is ineffectual to relieve the relator from the payment of the tax. During the period in question the Metropolitan Railway Company did not exercise the corporate franchise or operate the Second Avenue Railroad Company, but the relator’s predecessors did, and it was their duty to pay the tax imposed for that privilege.
The determination should be. confirmed, with fifty dollars costs and disbursements.
Determination unanimously confirmed, with fifty dollars costs and disbursements.