People ex rel. Edison Elec. Light Co. v. Campbell

• Decision Date: 20 June 1893
• Citation: 138 N.Y. 543,34 N.E. 370
• Parties: PEOPLE ex rel. EDISON ELECTRIC LIGHT CO. v. CAMPBELL, Comptroller.
• Court: New York Court of Appeals Court of Appeals

138 N.Y. 543

34 N.E. 370

PEOPLE ex rel. EDISON ELECTRIC LIGHT CO.

v.CAMPBELL, Comptroller.

Court of Appeals of New York.

June 20, 1893.

Appeal from supreme court, general term, third department.

Certiorari by the Edison Electric Light Company against Frank Campbell, comptoller of the state of New York, to review respondent's decision in declining to set aside taxes assessed on the relator, under the corporation tax laws, for the year ending November 1, 1891. From an order of the general term (22 N. Y. Supp. 1113) affirming the determination of the comptroller, relator appeals. Reversed.

S. B. Lewis, for appellant.

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

EARL, J.

The relator is a domestic corporation with a capital of $1,5000,000. The comptroller, under the act chapter 542 of the Laws of 1880, and the acts amendatcry thereof and supplementary thereto, determined that its entire capital in the year 1891 was employed in this state, and estimated its value at $3,000,000, and upon that sum imposed the tax authorized by the act. The relator does not complain that the value placed upon its capital was too high, but it claims that none of it was employed within the state, and hence that none of it was taxable under the act; and whether this claim, as to the entire capital, or any portion of it, is well iounded, is the sole matter for our determination. The tax could be imposed only as to so much of the capital as was ‘employed within this state,’ and the comptroller claimed that the whole of it was so employed. We think he was mistaken. It is sufficiently accurate, for the purpose now in hand, to say that the entire capital of the relator was originally in vested in patent rights. Corporations were formed in various cities of this state, and to a large extent in cities outside of this state, to use these patents; and to these corporations the relator granted the right to use the patents, and in compensation for such grants it received stocks of such corporations, and during the year 1891 it held such stocks, and received the dividends declared thereon. As to so much of such stocks as was in corporations organized and existing in this state, it cannot be doubted that its capital was employed within this state. So much of its capital, to wit, its patents, as was used to purchase stocks, was employed for that purpose, and was thus used for the business of the relator. The stocks existed within this state, and were kept and held to produce revenue here, and hence, in every sense, were employed within this state. They took the place, as a portion of the relator's capital, of the patent rights transferred in payment for them. The stocks which the relator took in companies organized outside of this state stood for so much of the relator's capital invested outside of the state. It took a portion of its capital, to wit, a portion of its patent rights, and employed it outside of the state to purchase those stocks. Its property in those corporations, represented by its shares of stock, was outside of this state, and was in no sense employed here. Those stocks had no situs here, and were not taxable here, under any system of taxation which has ever existed in this state. People v. Commissioners of Taxes, etc., of New York, 5 Hun, 200, 64 N. Y. 541; People v. Commissioners of Taxes, etc., of New York, 4 Hun, 595, 62 N. Y. 630; People v. Wemple, 133 N. Y. 323, 31 N. E. Rep. 238; People v. Same, 129 N. Y. 558, 29 N. E. Rep. 812. It is quite true that so much of the relator's capital as...