Peoples ex rel. Farrington v. Mensching

Decision Date08 January 1907
Citation79 N.E. 884,187 N.Y. 8
PartiesPEOPLE ex rel. FARRINGTON v. MENSCHING.
CourtNew York Court of Appeals Court of Appeals

OPINION TEXT STARTS HERE

Appeal from Supreme Court, Appellate Division, First Department.

Application by the people, on the relation of Irving K. Farrington, against Louis Mensching, a peace officer of the county of New York, for a writ of habeas corpus. From a judgment of the Appellate Division (101 N. Y. Supp. 1138) dismissing the writ, relator appeals. Affirmed.

On the 1st of August, 1906, the relator was arrested by the respondent under a criminal warrant, which charged that ‘on the 26th day of July, 1906, at the city of New York, in the county of New York, one Irving K. Farrington did sell and deliver to Donald C. Catlin certificates of stock without making any memorandum of sale and without affixing any stamp or stamps and without the payment of any tax, in violation of chapter 241 of the Laws of 1905, as amended by chapter 414 of the Laws of 1906.’ The affidavit upon which the warrant was issued was made by Donald C. Catlin, who alleged: That he resided in the city of New York. That he was a broker by occupation and had an office on Wall street, in that city. That on the 26th of July, 1906, the relator, a resident of the state of New Jersey, sold to him in the borough of Manhattan the following shares of stock, to wit: ‘A certificate for 1,000 shares of the capital stock of the Old Gold Mines Company, a corporation organized and existing under and by virtue of the laws of the state of Wyoming. That the par value of said stock is one cent ($.01) per share. That said stock was so issued by said company under and pursuant to the laws of the said state of Wyoming, and that the sale thereof by said Farrington to deponent was for the sum of thirty ($30) dollars in cash, at the rate of three cents ($.03) per share, that being the then market value of said stock and to the best of deponent's knowledge, information and belief the actual value thereof. A certificate for 1,500 shares of the capital stock of the Black Butte Mining Company, a mining corporation organized and existing under and by virtue of the laws of the state of Maine. That the par value of said stock is ten cents per share. That the said stock was so issued by said company under and pursuant to the laws of said state of Maine; and that the sale thereof by said Farrington to deponent was for the sum of $105 in cash, at the rate of seven cents ($.07) per share, that being the then market value of said stock and to the best of deponent's knowledge, information and belief the actual value thereof. A certificate for 1,000 shares of the capital stock of the Goldfield Blue Bell Mining Company, a mining corporation organized and existing under and by virtue of the laws of the territory of Arizona. That the par value of said stock is one ($1) dollar per share. That said stock was so issued by said company under and pursuant to the laws of the territory of Arizona, and that the sale thereof by said Farrington to deponent was for the sum of twenty ($20) dollars in cash, at the rate of two cents ($.02) per share, that being the then market value of said stock and to the best of deponent's knowledge, information and belief the actual value thereof. A certificate of 1,000 shares of the capital stock of the Mergenthaler-Horton Basket-Machine Co., a corporation organized and existing under and by virtue of the laws of the state of Maine. That the par value of said stock is one ($1) dollar per share. That said stock was so issued by said company under and pursuant to the laws of said state of Maine, and that the sale thereof by said Farrington to deponent was for the sum of one hundred and forty ($140) dollars in cash, at the rate of fourteen cents ($.14) per share, that being the then market value of said stock and to the best of deponent's knowledge, information and belief the actual value thereof; that said corporation is engaged in the business of manufacturing fruit baskets and other baskets.’ The complainant further alleged that, pursuant to such sale, he paid the relator the sum of $295, the total purchase price of such shares, and that the latter delivered to him certificates representing the same, but without affixing ‘any stamp or stamps and without paying any tax on making said sale or sales and delivery, although requested by the deponent so to do, in violation of the provisions of’ said act of 1905, as amended by said act of 1906. The relator alleged in his petition for the writ that he was restrained of his liberty by the respondent under said warrant issued upon said affidavit, and that his detention was illegal, because the magistrate was without jurisdiction to issue the warrant or cause his arrest, inasmuch as chapter 414, p. 1008, of the Laws of 1906 is unconstitutional, and also because said act does not apply ‘to the transfer of shares of stock whose par value is less than $100.’ The return of the respondent was in substance that he had arrested and detained the relator by virtue of the warrant issued upon said affidavit, and ‘that further than this there is no cause or reason for the detention of the relator known to me.’ On the 2d of August, 1906, the Supreme Court at Special Term dismissed the writ and remanded the relator to custody. Upon appeal to the Appellate Division the order dismissing the writ was unanimously affirmed, and thereupon the relator appealed to this court.Horace E. Parker, for appellant.

Wm. Travers Jerome, Dist. Atty.

(E. Crosby Kindleberger, of counsel), for respondent.

Louis Marshall, for certain interveners.

Julius M. Mayer, Atty. Gen. (Horace McGuire, of counsel), for the state of New York.

VANN, J. (after stating the facts).

The tax law, as amended by chapter 241, p. 474, of the Laws of 1905, imposed a tax ‘on all sales, or agreements to sell, or memoranda of sales or deliveries or transfers of shares or certificates of stock in any domestic or foreign association, company or corporation, made after the first day of June, 1905,’ of two cents ‘on each hundred dollars of face value or fraction thereof.’ Section 315.

By chapter 414, p. 1008, of the Laws of 1906, section 315 was amended ‘to read as follows'; that is, the original section was repeated in haec verba, except that the words ‘share of one’ were inserted in the taxing clause, so as to impose a tax ‘on each share of one hundred dollars of face value or fraction thereof,’ instead of on ‘each hundred dollars of face value or fraction thereof.’ There was no repealing clause, general or special, and the original section was left unchanged except as stated, and except, also, that two unimportant verbal changes were made and the following sentence was added at the end of the section: ‘The Comptroller may, upon satisfactory proof that stamps have been erroneously affixed and cancelled in payment of the tax upon a transfer and to the loss of an innocent person, refund the amount thereof from appropriations made for necessary expenses under this act, provided the tax justly due is paid upon such transfers.’ Section 317, relating to the ‘penalty for failure to pay taxes,’ and section 321, relating to the ‘power of State Comptroller,’ were also amended, but not so as to have any material bearing upon the questions discussed in this opinion. The amended act ‘became a law’ on the 11th of May, 1906, and took effect immediately.

What did the Legislature mean by imposing the tax ‘on each share of one hundred dollars of face value or fraction thereof’? Do the words ‘fraction thereof’ qualify the word ‘share,’ or the words ‘one hundred dollars'? Does the fraction relate to the ‘share’ or to the amount? Does the section have the same meaning as if it read ‘on each share of the face value of one hundred dollars, and on each share of the face value of a fraction of one hundred dollars,’ or as if it read ‘on each share of the face value of one hundred dollars and on any fraction of a share’? We think the intention was to tax the sale of all shares of the face value of $100, and also all shares of the face value of any fraction of $100. The structure of the sentence indicates a change in the unit of taxation from a certain amount of face value to a share, whether large or small. The theory that the Legislature intended to tax shares of the face value of $100 and leave all others untaxed, although plausible, impresses us as unsound. This would exempt shares with a face value of $99 and less, and $101 and more, including those with a face value of $5,000, of which we recently had an instance before us. Matter of Brandreth, 169 N. Y. 437, 439,62 N. E. 563,58 L. R. A. 148. According to the record ‘not less than five million shares of stock’ with a face value of less than $100 a share are sold each year within the county of New York, and the number of corporations issuing the same exceeds 2,000. Either construction, however, raises the question as to the power of the Legislature to make a classification so purely arbitrary as to have no reason, not even an insufficient or merely plausible reason, to justify it.

We adhere without qualification to the decision made when the act of 1905 was before us and broadly indorse the reasons given to support the judgment then rendered. People ex rel. Hatch v. Reardon, 184 N. Y. 431, 77 N. E. 970. We held that ‘the Legislature has power to classify as it sees fit by imposing a heavy burden on one class of propery and no burden at all upon others,’ provided ‘all persons and property in the same class are treated alike’ and ‘the tax is imposed equally upon all property of the class to which it belongs. In discussing the subject we said that ‘while a tax upon a particular house or horse, or the houses or horses of a particular man, or on the sale thereof, would obviously invade a constitutional right, still a tax upon all houses, leaving barns and business buildings untaxed, or upon all horses or the sale thereof, leavingsheep and cows untaxed,...

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