173 N.Y. 255 | NY | 1903
I concur in the conclusions reached by O’Brien, J., except as to that part thereof which holds that the item of $15,230,186.06 is not taxable. The court below found that this item represented the rolling stock employed outside of the state, it “ being such proportion of all of relator’s rolling stock as the mileage thereof without the State bears to the entire mileage of said rolling stock.” As I understand this iinding it is to the effect that the rolling stock of the relator is used in this state and outside of the state ; that is, cars are loaded at some point in the state, as for instance in the city of 27ew York and run over the relator’s road to some other point, say, the city of Buffalo. They then are transferred on to other roads and are run to points outside of the state where they are unloaded and then reloaded and returned to this state. The entire mileage includes that traveled in this state as well as that out of the state; this, with the distance traveled outside of the state and the total value of the stock, furnishes the proportion upon which the computation is made.
Under the findings of the court below, as we understand them, the average amount of the relator’s capital stock during the year was $108,750,000 ; the average price was $129.8125, making,the average cash value of the relator’s capital stock for the year $141,171,093.75. The entire amount of the relator’s total assets was $337,760,785.52, and the portion of such assets as used in this state $205,029,380.45, to which sum should be added the relator’s rolling stpck, $15,230,186.06, making the total assets used within the state $220,259,566.51. The statement would thus he
x : 141,171,093.75:: 220,259,566.51 : 337,760,785.52. Under this statement x = $92,060,076.91, the amount to be assessed atone and one-half mills, which amounts to $138,090.11.
In view of the fact that there is no express finding hy the comptroller that none of the relator’s rolling stock was used exclusively outside of the state, I think it advisable that the proceedings should be remitted to the comptroller, to the end that further evidence may be taken upon that subject in case it should be claimed that some portion of the relator’s rolling, stock was used continuously outside of the state, and if it should be found that such was the fact, the amount thereof should be deducted and the order of the Appellate Division and that of the comptroller should be modified accordingly, without costs to either party.
TI lis appeal presents a" controversy between the relator and the state concerning the amount of the annual franchise tax for the year ending October 31, 1900. The statute prescribes that this tax must be computed upon the basis of the amount of the relator’s capital stock employed- within this state. The main contention of the learned counsel for the rélator is that the computation should be made upon the stock so employed at its par and not its actual value, and, hence, the determination nowjiere for review is erroneous since the computation was made upon the latter principle. The language of section 182 of the Tax Law would seem to support the relator’s contention, but this court has recently held that this section must be read with section 190, and when so read the basis for the tax is the actual and not the par value of the stock. (People ex rel. N. Y. & E. R. Ferry Co. v. Roberts, 168 N. Y. 14.) In the jn-esent case it would, doubtless, be to the advantage of the relator to have the tax based upon the par v-alue of the stock, since that value is much less than the actual value and the dividends are only five per cent, but in case of a corporation that had paid even a smaller dividend and whose stock was much below par it would be decidedly to its disadvantage. By reading the two sections together absurd and unequal results are avoided. The two sections are apparently conflicting. In such cases it is the duty of courts to reconcile contradictory or conflicting provisions when possible, and the case cited is a precise authority for the principle that the tax should be based upon the actual value. This permits the statute to operate in a way that is reasonable and just while the other view would render it even more confusing than it now is. Courts cannot always follow logical reasons when dealing with a complicated statute constructed without much method or system in the arrangement of its different parts and lacking in clearness and precision of language.-
Passing from this question of construction, there is nothing left of the controversy on either side save the proper application of the rule and the principles upon which the actual
(1) The relator held $90,578,400 of the stock of the Lake Shore and Michigan Southern Eailway Company and $18,900,825 in the Michigan Central Kail road Company. This stock was part of the relator’s capital or general assets. Both companies are foreign corporations, the former being partly within and partly without the state and the latter entirely without the state. This stock was purchased by the relator by the issue of bonds and the stock was pledged to a trust company as collateral security for the payment of the bonds. The relator being the owner of these stocks, they constituted part of its capital, but that part of its capital was not employed within this state, and so this court has held. (People ex rel.
(2) The court below found that a certain portion of the relator’s rolling stock, that is to say, its cars, both freight and passenger, was employed outside the state, the proportion being estimated on the mileage or wlieelage basis at $15,230,186.06. The court excluded this item from the calculation on the authority of People ex rel. Lackawanna Transptn. Co. v. Knight (75 App. Di v. 164). It was there held that the term “ employed within this state,” Used in section 182, did not mean simply the legal situs of the property, and this principle was decided in other cases. (People ex rel. Chicago Junction, etc., Co. v. Roberts, 154 N. Y. 1; People ex rel. Waehington Mills Co. v. Roberts, 8 App. Div. 201; affirmed on opinion below, 151 N. Y. 619.) It is obvious that since the relator is a great interstate railroad traversing the continent that a large proportion, or at least some, of its rolling stock must be always employed outside of the state. It may be that
(3) The learned court below found that three other items of the relator’s property, amounting in the aggregate to $1,236,871.17, was not capital at all, or at least was not employed in this state. This general item was made up of the sum of $965,217.97 for “ anticipated dividends ” on stock of other corporations which the relator owned. The dividends had not been declared, and were, therefore, a mere incident to the stock. It seems to be conceded by both parties that this item was properly excluded. The second item embraced in the general amount, above stated was $171,653.20 for bills receivable. This sum appears to have been made up of expenditures by the relator on leased lines. Ko direct return is expected for these expenditures and the relator holds no obligation for reimbursement, although carried on the books as “ Bills receivable,” and so the court below properly held that this item 'constituted no part of the relator’s property within this state for the purposes of the franchise tax. The third item entering into the general sum above stated was $100,000 for coal and supplies without the state. It is hardly conceivable that all the coal which the relator uses in the operation of its railroad can be said to be employed within
(4) The relator owned $2,597,400 of the capital stock of the Merchants Dispatch Transportation Company, a domestic corporation engaged in the transportation business. Eighty-nine per cent of that amount, or $2,311,686, represented business'of that company outside the state, and although these facts are found by the learned court below, it included the latter amount in its valuation of the relator’s property employed within this state. Since the relator’s holdings in this company were employed outside the state we think they should not be included in the calculation under the authorities cited above. • It is very difficult to see how a distinction was made between those items and the other items referred to which the learned court below excluded. It seems to have been assumed that since this stock was that of a domestic corporation it constituted a part of the relator’s property employed in this state; but, as already observed, the legal situs of the property does not determine the question, and since the learned court below found that the transportation company that issued the stock employed the capital represented thereby outside the state it is difficult to understand how the relator, by the mere fact of its ownership of the stock, could employ the-capital represented by it in this state. With respect to this item, we think that the decision of the learned court below should be corrected by the proper modification.
By a process of calculation which is not questioned here by either party, except as to the matters above referred to, the learned court below found, as stated in the opinion, that the amount of the relator’s capital employed within this state upon which the tax should be computed was $90,151,825.98, but since that amount was the result of an error in including a portion of the stock of the transportation company employed without the.state, namely, the sum of $2,311,686, the calculation arid estimate should be corrected upon the principles
The order of the Appellate Division should be modified accordingly, with costs to the relator in this court.
Parker, Ch. J., Baetlett, Martin and Cullen, JJ., concur with Haight, J.; O’Brien, J., reads for modification of order; Vann, J., absent.
Ordered accordingly.