People ex rel. Seth Thomas Clock Co. v. Wemple

• Decision Date: 24 May 1892
• Citation: 133 N.Y. 323,31 N.E. 238
• Parties: PEOPLE ex rel. SETH THOMAS CLOCK CO. v. WEMPLE, Comptroller.
• Court: New York Court of Appeals Court of Appeals

133 N.Y. 323

31 N.E. 238

PEOPLE ex rel. SETH THOMAS CLOCK CO.

v.WEMPLE, Comptroller.

Court of Appeals of New York.

May 24, 1892.

Appeal from supreme court, general term, third department.

Certiorari by the Seth Thomas Clock Company, a foreign corporation, doing business in the state of New York, to review the decision of Edward Wemple, comptroller of the state, imposing a tax on relator. From a judgment of the general term affirming the decision of the comptroller, the company appeals. Reversed.

Rodman & Coggswell,(William S. Coggswell, of counsel,) for appellant.

S. W. Rosendale, Atty. Gen., for respondent.

O'BRIEN, J.

The comptroller imposed a tax upon the relator, a foreign corporation organized and existing under the laws of the state of Connecticut, of $5,605.51 for the years 1880 to 1890, both inclusive, under chapter 542 of the Laws of 1880, as amended by subsequent enactments.¹ The relator, insisting that the tax was illegal, applied to the comptroller, under chapter 463 of the Laws of 1889, for a revision and readjustment, and, that application having been denied, sued out a writ of certiorari, under the same statute, to review the decision. The general term, where the writ was returnable, affirmed the determination of the comptroller, and the relator has appealed to this court. A foreign corporation carrying on business within this state, unless it appears that it is within some one of the exceptions contained in the statute, is subject to taxation. The basis of the tax in such cases is the ‘amount of capital stock employed within this state.’ If it does not employ any of its capital here, there is no basis for taxation. So, also, a foreign manufacturing corporation actually engaged in manufacturing within this state was exempt from taxation the same as a domestic corporation of the same character. This exemption was restricted by chapter 353 of the Laws of 1889, which requires that the corporation, in order to be entitled to claim the exemption, shall be ‘wholly engaged in carrying on manufactures within this state.’ The legislature in passing this amendment intended to apply a new rule to the taxation of foreign manufacturing corporations. Under the statute, as originally enacted, the inquiry was whether such a corporation was actually carrying on manufacturing within this state. If it was, then it came within the exemption, even though the greater part of its manufacturing operations was carried on at home. If it was carrying on enough of its manufacturing operations in this state so that it could be said, fairly and reasonably, to be engaged in manufacturing here, then it came within the letter and the spirit of the exemption clause; and neither the comptroller nor the courts had the right to hold that, because only a comparatively small portion of all its manufacturing operations were carried on here, it was not, for that reason, within the exemption. If the corporation, in the ordinary and regular course of its business, in good faith, and not for the purpose of evading the law, was actually carrying on any part of its manufacturing operations here, that was enough. It was not left for the taxing officer or the courts to prescribe how much or what percentage of its whole manufacturing business should be done within this state on order to entitle the corporation to claim the exemption. If the legislature, in providing that manufacturing corporations should be exempt from taxation, intended, as it probably did, to encourage and foster manufactures within the state, the policy of the law would apply as well to a corporation carrying on a small business as to one engaged in larger and more extensive operations. One foreign corporation might find it necessary or convenient to carry on a large part of its manufacturing operations here, while another would desire to carry on only a very small part; but this circumstance would not furnish a reason for holding that the former was within the exemption and the latter was not. As to the tax imposed upon the relator for the years 1889 and 1890, and after the amendment referred to, this question does not arise. That can be questioned only with respect to the amount and the basis of computation adopted by the comptroller. But it does arise with respect to the tax levied for the years preceding. The relator is engaged extensively in the manufacture of clocks and watches. It has large factories for that purpose in Connecticut, and there the principal part of its manufacturing operations is carried on. It has a business office and sales agency in the city of New York, where the greater part of its contracts for the sale of the products of its factories is made. It appears also that during the years for which the tax was levied it actually manufactured within this state to the extent of from $16,000 to $20,000 in each year. The record does not show the particular character and nature of the relator's operations in this state, claimed to constitute...