116 N.Y.S. 209 | N.Y. Sup. Ct. | 1909
This is a proceeding by certiorari on the part of the relator to review the amount of the valuation and assessment of its special franchise in the city of Rochester for the year 1907; and the other cases referred to are for the same purpose for prior years.
In the year 1907 proceeding there is a stipulation on the part of the relator, the then Attorney-General, for the Board of Tax Commissioners and the corporation counsel of the city of Rochester, agreeing to certain facts for the purpose of this proceeding only. So far as material to this memorandum, such stipulated facts are as follows:
“ Fourth. That the said State Board of Tax Commissioners in the year 1907 fixed and determined the valuation of the special franchise of relator in the City of Rochester at the sum of $12,000.
“ Sixth. That the valuation of relator’s special franchise in the City of Rochester made by said State Board of Tax Commissioners was at least the full value thereof.
“ Seventh. That real estate in the City of Rochester was generally assessed and valued upon the assessment rolls of said City for the year 1907 at eighty per cent, of its full and true value.”
Upon this agreed state of facts the relator asks the court to reduce its valuation or assessment of $12,000 by twenty per centum thereof, in order to conform to the assessment of real estate by the local board of assessors of the city of Rochester, which application is opposed by the Board of Tax Commissioners and the city of Rochester.
There seems to be no authoritative judicial determination of this question, although it has been much involved in judicial discussion.
It is important then at the outset to determine what are the respective duties of the board of assessors that fixes the value of real estate in the city of Rochester and the State board that fixes the valuation of this special franchise for the purpose of assessment.
Section 21, of the Tax Law, so far as essential to our purpose, is as follows: “ Preparation of assessment roll. They (Assessors of the City of Rochester) shall prepare an assessment roll containing six separate columns and shall, according to the best information in their power, set down:
“ 1. In the first column the names of all the taxable persons in the tax district.
“ 2. In the second column the quantity of real property taxable to each person with a statement thereof in such form as the commissioners of taxes shall prescribe.
“3. In the third column the full value of such real property.
“ 4. In the fourth eolumn the full value of all the taxable personal property owned by each person respectively after deducting the just debts owing by him.
The oath or verification which the assessors or a majority of them are required by statute to make to said assessment roll is as follows: “ We, the undersigned, do severally depose and swear that we have set down in the foregoing assessment roll all the real estate situated in the tax district in which we are assessors, according to our best information, and that, with the exception of those cases in which the value of the said real estate has been changed by reason of proof produced before us, and with the exception of those cases in which the value of any special franchise has been fixed by the state board of tax. commissioners, we have estimated the value of the said real estate at the sums which a majority of the assessors have decided to be the full value thereof; and, also, that the said assessment roll contains a true statement of the aggregate amount of the taxable personal estate of each and every person named in such roll over and above the amount of debts due from such persons, respectively, and excluding such stocks as are otherwise taxable, and such other property as is exempt by law from taxation, at the full value thereof, according to our best judgment and belief, * * * ”
It will thus be seen that, as to real estate generally, the board of assessors of the city of Eochester are required by law to assess it at its full value, and, further, that said assessors are not only required to assess such real property at its full value but they are required to swear that they have" so done.
¡Now let us see what is required to be done as to assessment of special franchises. Section 42 of the Tax Law, so far as essential here, is as follows: “Assessment of special franchises. The state board of tax commissioners shall annually fix and determine the valuation of each special franchise subject to assessment in each city, town, or tax district. After the time fixed for hearing complaints the tax commissioners shall finally determine the valuation of the special franchises, and shall file with the clerk of the city or town in which said special franchise is assessed a written statement duly certified by the secretary of the board of the val-
“ Schedule of Dates for Filing of Assessments of Special Franchises.
“ Name of City. Date,
“ Rochester, April first.
* * * -x- * * -x -x- * # *
“ Buffalo, December first.
“ Each city or town clerk shall, within five days after the receipt by him of the statement of assessment of a special franchise by the state board, deliver a copy of such statement certified by him to the assessors or other officers charged with the duty of making local assessments in each tax district in said city or town and to the assessors of villages and commissioners of highways within their respective towns and villages. The valuations of every special franchise as so fixed by the state board shall be entered by the assessors or other officers in the proper column of the assessment roll before the final revision and certification of such roll by them, and become part thereof with the same force and effect as if such assessment had been originally made by such assessor or other officer.”
It thus appears that the State Board of Tax Commissioners is required to fix and determine the valuation of each special franchise and that it is the duty of the local board of assessors to enter the same in the tax roll. The local assessors’ duty as to special franchise assessments is a ministerial one, simply entering the amount fixed by the State Board of Tax Commissioners in the proper column of the assessment roll. People ex. rel. N. Y. C. & H. R. R. R. Co. v. Priest, 169 N. Y. 436. The valuation herein referred to is, of course, the full value. It is not 80 per cent, of its value nor is it anything in excess of its valuation, but it is what
The court is asked in this proceeding’ to direct that the State Board of Tax Commissioners shall, so far as this corporation is concerned, undo its work in the city of Bochester and make its valuation conform to the valuation of another body of officials, the local board of assessors in Bochester, which concededly has not performed its statutory duty. Except for the fact that a practice has grown up to some extent permitting this' to be done, it is doubtful if any court would be asked to take the action desired here.
The right is claimed for the relator to equalize with other real estate in said city of Rochester this valuation of its special franchise property in Rochester for this, among other reasons, because, in article 1, section 2, subdivision 3 of the Tax Law, the term “ real estate ” as included in that chapter (which is chapter 908 of the Laws of 1896, as amended) is held to include special franchises — “ including the value of all franchises, rights or permission to construct, maintain or operate the same in, under, above, on or through streets, highways, or public places. * * * ”
“A franchise, right, authority or permission specified in this subdivision shall for the purpose of taxation be known as a ‘ special franchise.’ A special franchise shall be deemed to include the value of the tangible property of a person, copartnership, association or corporation situated in, upon, under or above any street, highway, public place or public waters in connection with the special franchise. The tangible property so included shall be taxed as a part of the special franchise.”
The Court of Appeals has considered this statute in People ex rel. Metropolitan St. R. Co. v. State Board of Tax Commissioners, 174 N. Y. 417-435; and in its opinion a
The opinion is a very enlightening one on the subject I am discussing, and I quote from it at length, continuing from page 436: “ The statute, which is an amendment of the General Tax Law, declares, in substance, that the right, authority or permission to construct, maintain or operate some structure, intended for public use, ‘ in, under, above, on or through streets, highways, or public places,’ such as railroads, gas pipes, water mains, poles and wires for electric, telephone and telegraph lines, and the like, is a special franchise. For the purpose of taxation such a franchise is made real estate and is c deemed to include the value of the tangible property of a person, copartnership or corporation situated in, upon, under or above any street, highway, public place or public waters in connection with the special franchise and taxed as a part thereof.’ § 2, clause 3. This includes nothing but what is in the street, directly or indirectly, and excludes power houses, depots and all structures without the lines of the street. The taxes thus imposed are for general purposes, are collected in the same way and used for the same objects as other taxes upon the general assessment roll.
“ Prior to the passage of this act, general franchises had been taxed for the benefit of the state under a valuation made by a state officer with the sanction of the courts. (L. 1896, chap. 908, §§ 182, 190; People ex rel. W. & H. Co. v. Roberts, 154 N. Y. 101.) Special franchises, however, had never been lawfully assessed, either by local or state authority, but were made taxable property by the act before us for the first time in the history of the state.”
What was the situation that confronted the Legislature when it passed this statute to raise money for the support of government?
The governor had officially announced that “ the farmers,
How did the Legislature deal with this situation?
It created a new system of taxation, brought within its range a new character of property and assigned the duty of making the valuation to the State Board of Tax Commissioners, composed of tax experts already in office, whose sole
The statute should be considered in the light of the circumstances existing when it was passed, which were extraordinary and unprecedented. The system thus created had never been known before; and, as its main subject, the act dealt with special franchises, which had never been taxed before. Property unknown as the subject of taxation to the framers of any of our Constitutions was brought into the system, which required new methods of valuation and the exercise of functions which had never belonged to local assessors. The property was sui generis, and from its nature c-ould not be valued by local officers. Unless it escaped taxation in the future as it had in the past, it was necessary to commit the power to other officers with new functions, wider experience and greater opportunities for observation, who would be able to grasp the new scheme of taxation as a whole. We should not be misled by the terms “ valuation ” or “assessment” as the simple exercise of judgment, for
The local assessors dealt with tangible property, which could be seen and was open to the judgment of ordinary men, or with written evidence of debts or contracts the value of which could be easily computed. It was their habit to measure, weigh and count; to learn the market value from current sales; to pass upon physical and material property which they were accustomed to own, rent or use, and with which they were familiar in their daily life. They saw it, knew it and could judge as to its value. It was before their eyes and they could act upon it directly, without resort to complicated computations.
On the other hand, the valuation of special franchises had never been attempted before, but presented a new field of action and called for the exercise of new and different functions. They could not be seen, handled, measured, weighed or counted. They were specialties and had no market value. There were no sales to guide and no experience from ownership, rental or use to rely upon. The new property is real estate in name, but not in reality, for it a mere privilege to do something in public streets and places not permitted to citizens generally^ While local in a narrow sense it is unconfined in its real nature, for it depends largely on the earning capacity of a going concern, frequently with several special franchises, but with no means of determining the amount earned by each. The value depends upon so many conditions, existing, frequently, in localities widely separated, and upon such a complication of facts and figures that the valuation cannot be safely intrusted to men of common knowledge and experience. What greater calamity m the shape of taxation could threaten the vast interests involved than to intrust this important subject to unskilled and incompetent men, some of them willing, it may be, not only to protect their own localities at the expense of others, but to oppose corporations and favor individuals? The
“ The special franchises of a railroad in operation from a city into suburban towns may be properly treated as an aggregation, without a precise situs, as one piece of property producing a gross income, as a single subject of valuation, like all the personal property of an individual, from one end of the line to the other, although the amount when ascertained must be apportioned and distributed among the several tax districts affected. § 42. This can make no difference to the company, for it has only so much to pay in any event; and it shows that the work of valuation is not local, but general, in its character, and that it is a matter of central rather than municipal concern. It affects the general public rather than the people of a community. The subject is one that local officers cannot handle, because they cannot consider it as a whole, by going without their precincts, but must stop at the boundaries of their several districts. They cannot make the distribution among localities interested in the special franchises.”
What is said in this opinion in relation to railroads applies very well to the relator here, .a telegraph company which does business not only in the city of Rochester but in many other cities, towns and counties of the State of New York. As we have seen by the decision quoted, the problem which confronted the Legislature was to make a uniform system of assessment of special franchises throughout the State; and, in order to do this work, it was intrusted to the State Board of Tax Commissioners which might inquire in St.
The Court of Appeals has held (Mercantile Rational Bank v. Mayor, 172 N. Y. 35) that, where the assessors had assessed bank stock (personal property) at full value and where real estate on the same roll was assessed at not more than sixty per cent, of its value, certiorari would not lie to compel the equalization of the assessment of the bank stock with that of the real property, nor would equity intervene.
The assessment of real property in the city of Rochester
The Court of Appeals, as we have seen, has held that this property, i. e. special franchises, is a new species of property so far as taxation is concerned; that it is neither real nor personal, but partaking of the nature of both. We have seen that the statute requires and is satisfied by uniformity of taxation for the same kind or class of property, as of bank stock, as distinguished from real property. So it is immaterial into which of the two great classes of property, real or personal, this particular property is placed as, if all owners of special franchises are treated alike and assessed st full value, no injustice is done to the individual owners of special franchises.
In the struggle to keep from direct taxation, on account of its rapid growth, the State has lately been reaching out for different classes of property to tax and adopting a new method of taxation and diverting a portion of the revenues thus obtained from the locality where the property is situated into the- coffers of the State. The courts have approved this procedure. A recent instance of this is the mortgage recording tax, by which an entirely different method has been adopted for reaching the owners of that class of personal property from that which before had obtained and which now
See the opinion of Mr. Justice Herrick in People ex rel. Rochester R. R. Co. v. Priest, 41 Misc. Rep. 550, holding that the court has no power to direct the State Board of Tax Commissioners to violate the law and assess property at seventy per cent, of its true value.
In Coulter v. Louisville & Nashville R. R. Co., 196 U. S. 599, it is held: “ It is not beyond the power of a? State, so far as the Federal Constitution is concerned, to tax the franchise of a corporation at a different rate from the tangible property in the State.”
The point is also made by the city of Rochester and the State Board of Tax Commissioners that certiorari will not lie to equalize the values of special franchises fixed by the State Board of Tax Commissioners with that of ordinary real property fixed by the local assessors, for the reason that certiorari will only lie for inequality to review an assessment on the ground that it is made “ at a higher proportionate valuation than the assessment of other property on the same roll by the same officers.” Tax Law, art. 11, § 250.
This proceeding is brought under section 45 of the Tax Law, which, so far as material, is as follows:
“An assessment of a special franchise by the state board of tax commissioners may be reviewed in the manner prescribed by article eleven of this chapter, and that article applies so far as practicable to such an assessment, in the same manner and with the same force and effect , as if the assessment had been made by local assessors.”
This relator claims that section 250 should not be restricted in its meaning by the court, and that such a construction should be given it as would permit of the maintenance of this proceeding, and that the placing of the special
Although I have preferred to place my decision on the broader ground that the claimed inequality is not in fact an inequality, still I think that this claim of the State Tax Board is correct, and that the" review contemplated and provided for by section 45, so far as inequality of assessment is concerned, relates to assessments or valuations of different special franchises alone and not their comparison with the assessments of any other kinds of property. But the principal reason for refusing to direct the State board to lower their assessment or valuation to correspond to that of the local assessors is that the State Board has complied with the law and the local assessors have not; and courts should not, and I think on examination will not, compel such a board to do violence to its conscience by returning as correct a valuation it does not believe to be correct; nor will the court sustain the action of an assessing board which has not complied with the law and reverse the action of a board that has complied with it.
It follows that the several writs of certiorari should be quashed with costs.
Writs quashed, with costs.