40 N.Y.S. 417 | N.Y. App. Div. | 1896
The relator is a foreign corporation organized under the laws of Massachusetts. It has a capital stock of $2,500,000, and is engaged in manufacturing woolen cloths at its mills in Lawrence in such State. Its principal office is in Boston. It rents part of a building in Hew York city, in which is an office in charge of a selling agent, where are kept and distributed to a number of traveling agents and to customers samples of its goods. About twenty employees, including the traveling salesmen, are paid at this office. For the purpose of meeting such expenses, for paying the rent of rooms, which is about $8,000 per annum, and for all other incidental expenses, about $4,000 each month is sent to such sales agent by the
At this office in Hew York city orders are taken for the company’s goods. Also the salesmen throughout this State, and from some others, send orders for such goods to the agent at the Hew York office. All such orders, however, are sent by such agent to the treasurer in Boston for his approval or disapproval, and all goods sold under such orders are shipped from Boston, or the mills, direct to the purchaser. Only goods to be used as samples are shipped to the Hew York office. Ho goods whatever are kept for sale in the city of Hew York. Such of the goods as are there kept for samples are cut into small pieces which are worthless as merchandise, and, when they have served their purpose as samples, are sold for old rags. There have been some instances where goods-ordered by purchasers in Hew York city and shipped to them from Boston have been rejected by the purchasers, and some where the purchaser has become pecuniarily irresponsible, and, therefore, unable to take them. In those cases such goods have been retained a short time at the roo ms in Hew York awaiting a resale or a return to the mills, and instructions from the treasurer. But these instances-have been infrequent, and it is very plain that it has never been the custom or intent of the relator to keep goods for sale at its said rooms in Hew York.
Upon these facts the Comptroller determined that the relator was doing business within this State, and that it employed upwards of $27,000 of its capital stock in this State, and assessed against it the amount of tax and penalty required by the statute.
In this conclusion we think that the Comptroller erred. Without reference to the question whether the relator was doing business in this State within the meaning of section 3, chapter 522, Laws of 1890, such facts do not warrant the conclusion that any of its capital stock was employed within this State. It kept no property for sale within this State. The samples were not merchantable, and were of such trifling value that, like its office furniture, it cannot
As to the bank account, it was the product of moneys sent monthly by the company to its agent to pay its monthly expenses. Such remittances were placed by him in bank, and checks drawn against it as a convenient method of making the payments for which it was especially designed. It appears, therefore, that the relator had constantly on hand a monthly average of about $500 sent for the express purpose of paying certain debts which accrued monthly, and that at all times such unpaid debts exceeded the amount on hand. Such remittances may have represented capital stock, and they may have been derived from the monthly earnings of the company and represented surplus. The treasurer swears, in his affidavit presented to the Comptroller on the application for a reassessment, that all the capital stock is employed in manufacturing in the State of Massachusetts. But if we treat it as capital on the theory that it must be so considered unless the company presents facts to the Comptroller showing that it was derived from surplus, nevertheless, it cannot fairly be said to be capital employed within this State. To be employed within this State the property, whether money or goods, representing the capital, should be kept on hand in this State for use in the general business of the company, and it is its actual value only that is subject to taxation. The reasoning in The Seth Thomas Clock Company’s case, above cited, and the purpose of the act under consideration, indicate that such is the rule. A sum of money sent into this State from the home office for the express purpose of paying a debt incurred herein, whether for services rendered or materials furnished, cannot reasonably be considered capital employed within this State. We may, I think, safely conclude' that it was not the intent to levy a tax on all purchases made by a foreign corporation within this State. For the same reason
Upon the record before us it does not appear that the relator had any capital stock employed within this State, and, therefore, the determination of the Comptroller should be reversed.
All concurred.
Determination of the Comptroller reversed, with fifty dollars costs and disbursements.