25 N.Y.S. 340 | N.Y. Sup. Ct. | 1893
It was conceded by the counsel for the commissioners on the hearing before the referee that the actual value of the realty of the corporation did not exceed $1,000,000, and he concedes in his brief that the evidence returned by the referee shows that the actual value of its personalty did not exceed $590,-269, which fixes the total value of the relator’s property at $1,390,-269, which is $348,604 less than its liabilities. The learned counsel for the appellants states in his brief that the only question which he presents for consideration on this appeal is “whether, as a matter of law, the debts of the relator were necessarily deduct
“Sec. 3. The capital stock of every company liable to taxation, except such part of it as shall have been excepted in the assessment roll, or as shall have been exempted by law, together with its surplus profits or reserved funds, exceeding ten per cent, of its capital, after deducting the assessed value of its real estate, and all shares of stock in other corporations actually owned by such company, which are taxable upon their capital stock under the laws of this state, shall be assessed at its actual value, and taxed in the same manner as the other personal and real estate of the county.”
This section has been several times considered by the courts, and it is now settled that the term “capital stock,” as used therein, denotes the property owned by the corporation, and not the par or actual value of the shares issued to and held by its stockholders People v. Coleman, 126 N. Y. 433, 27 N. E. Rep. 818. Neither the par nor the actual value of all the shares issued by the corporation is necessarily the measure of the actual value of its capital,—property,—but such value is to be ascertained by evidence or inquiry. The record conclusively showing that the value of the property, real and personal, of the corporation is considerably less than the par value of its shares issued and held by its stockholders, we need not concern ourselves with the meaning of the term “surplus profits or reserved funds,” used in the section quoted. The word “capital,” in this judgment, is used as denoting all of the property of every kind owned by the corporation. In this case the commissioners estimated the real and personal property of the corpo-; ration to be worth $1,500,000. They estimated the value of the realty at $531,027, and they reached the value of the personalty by deducting the latter amount from the former. The evidence returned by the referee shows, as the learned counsel for the appel-' lants concedes, that the actual value of its personalty did not exceed $590,269. Realty and personalty must be separately valued for the purposes of taxation, and if the personalty be overvalued and the realty undervalued on the roll the valuation of the personalty cannot be sustained on the theory that the undervaluation of the realty equals or exceeds the overvaluation of the personalty. It is apparent, therefore, that the assessment against the relator for personalty was excessive.
Should the relator ,have been assessed any amount on its personalty? In People v. Ferguson, 38 N. Y. 89, an assessment was made against the relator for $40,000 for personal property. The share capital of the corporation was $100,000, all of which had been paid in, and it had a surplus of $141,932.55. It had personalty of the value of $236,432.55, and real estate of the value of $5,500. After deducting from the personalty the property which was not liable to taxation,' there was left $46,490.55, but the relator had outstanding policies in force which it would cost $80,000 to reinsure. The commissioners refused to make any allowance for this contingent liability, and assessed the corporation upon $40,000 for its personalty. Their action was reviewed on certiorari and affirmed at general term, but on appeal to the court of appeals it was reversed,
“I may add to this, in addition it would equally be the duty of the commissioners to consider the indebtedness [of the corporation] as reducing the actual value of the stock, and form their estimate on that basis. The valuation was reduced one-half,—a sum much larger than any indebtedness of the company,—and there was no ground for supposing the commissioners did not consider such indebtedness in making the assessment."
In People v. Commissioners of Taxes & Assessments, 31 Hun, 32, the par value of the relator’s shares outstanding was $10,000. It owned real estate of the value of $183,000. An assessment of $10,000 was made upon the capital stock. The relator insisted that the assessment for personalty was invalid, because a mortgage, made by another railroad corporation as security for $4,000,000 of bonds, covered the property of the relator, and that this lien should be considered in determining the actual value of the relator’s capital. It was held that this sum was to be considered in determining the actual value of the relator’s property, and that, as it exceeded its assets, the corporation was not liable to be assessed for personalty. In People v. Asten, 100 N. Y. 597, 3 N. E. Rep. 788, the relator had a share capital of $200,000, which had been paid in, and invested in real estate, on which there was a mortgage for $80,000, given as security for the bonds of the corporation. Its real estate was valued by the commissioners at $100,000. It held stocks in other corporations of the value of $36,500. These two sums, aggregating $136,500, were deducted from the amount of the share capital, which left a remainder of $03,500, on which the corporation was assessed. The relator insisted, among other things, that the amount of its debt, $80,000, should have been deducted. It was held that the evidence did not show that the value fixed by the commissioners was incorrect, and the assessment was affirmed. The court, in the course of its discussion, said:
“There is no provision of law which authorizes a deduction from the capital stock by reason of the indebtedness of the company. While this indebtedness is a proper subject for consideration in estimating the value of the stock, there is no authority for its deduction from the value of the stock after the estimate has been made.”
In People v. Coleman, (Sup.) 1 N. Y. Supp. 666, affirmed 112 N. Y. 565, 20 N. E. Rep. 389, the relator’s share capital was $300,000, and it had a gross surplus of $45,885. Its liability for unearned premiums was $24,666, which, deducted from the gross surplus, left a net surplus of $21,219, making its assets, assuming that its property outside of its net surplus was worth $300,000, $321,219. Of this amount $304,575 were invested in United States bonds, which, deducted from the total assets of the corporation, left $16,644, which sum was the assessed value of the relator’s property as fixed by
“It is undoubtedly true that after an estimate of the value of the capital stock has been made there is no authority for the deduction of the indebtedness of the corporation, but it is also true that the indebtedness of a corporation is a proper subject for consideration in estimating the value of the stock, and in the conclusion at which the learned justice arrived in this case in determining the value of the capital stock the indebtedness of the corporation was not considered. There being no market for the stock of this company, its value was attempted to' be ascertained by determining the value of its assets, and the aggregate value of its assets was $345,885.21. If, however, the corporation was indebted, this did not represent the actual value of its capital stock, because such value was reduced by the amount of its indebtedness. All the assets going to make up this aggregate had been assessed at their full market. value, no deduction whatever being made therefrom. Consequently the value of those assets was diminished in determining the value of the capital stock by the amount of the indebtedness. Therefore, deducting the amount of the indebtedness, which it is conceded amounted to $24,666.16, the total value of the capital stock of the corporation was $321,219.05. This deduction, however, the learned judge challenged upon the ground that it was improper to. consider this indebtedness in ascertaining the value of the capital stock of a corporation liable to taxation. In this it appears that he has fallen into an error. It would be improper to deduct such indebtedness after having determined the value of the capital stock, because that would be deducting the indebtedness twice, but in estimating the value of the stock the indebtedness of the corporation is a proper subject for consideration.’’
It is alleged in the petition of the relator “that on the second Monday of January, 1892, the total gross assets of your petitioner, exclusive of real estate and roadbed, did not exceed the sum of $590,269.12.” This is not denied by the return. One of the commissioners testified before the referee, but made no claim that the debts of the corporation were taken into account in making up their estimate of the value of the capital of the relator, and the learned counsel for the appellants in his brief states that “the gross assets of the relator, then, on the second Monday of January, 1892, amounted to $1,590,269. The respondents adopted a valuation of $1,500,000, from which they deducted the assessed value of real estate, as required by law. But the respondents did not deduct the indebtedness claimed by the relator, which exceeded the actual value of its real and personal property, exclusive of franchises.” The cases cited all arose under chapter 456 of the Laws of 1857, and they are decisive of the case at bar. The question cannot be regarded as an open one in this court. But, apart from
Vol. 2, (8th Ed) p. 1096.