People ex rel. Equitable Gaslight Co. v. Barker

• Decision Date: 04 December 1894
• Citation: 144 N.Y. 94,39 N.E. 13
• Parties: PEOPLE ex rel. EQUITABLE GASLIGHT CO. v. BARKER et al., Commissioners of Taxes.
• Court: New York Court of Appeals Court of Appeals

144 N.Y. 94

39 N.E. 13

PEOPLE ex rel. EQUITABLE GASLIGHT CO.

v.BARKER et al., Commissioners of Taxes.

Court of Appeals of New York.

Dec. 4, 1894.

Appeal from supreme court, general term, First department.

Certiorari on the relation of the Equitable Gaslight Company of New York against Edward P. Barker and others to set aside a tax assessment. From a judgment of the general term (29 N. Y. Supp. 1147) affirming a judgment for the relator, defendant appeal. Reversed.

D. J. Dean, for appellants.

Frederic R. Coudert, for respondent.

ANDREWS, C. J.

This is an appeal from the order of the general term affirming the order of the special term by which the assessment for the relator's capital for taxation for the year 1893 was vacated and set aside. The relator is a corporation organized under the law for the incorporation of gaslight companies, with a capital of $4,000,000, fully paid in or secured to be paid, and whose place of business is the city and county of New York. In the annual record of the assessed valuation of real and personal estate in said city and county for the year 1893 was entered the sum of $5,000,000 as the value of the relator's capital liable to assessment. Thereafter, pursuant to the provisions of section 820 of the consolidation act of 1882, the corporation made application to the commissioners of taxes for a reduction and cancellation of the assessment, and presented to the board a verified statement, and its vice president was orally examined by the commissioners in support of the application. The commissioners subsequently decided the application, and reduced the assessment to the sum of $1,972,700. The relator, being dissatisfied with the decision, and claiming that upon the proof it had no assets subject to taxation in the year 1893, procured a certiorari, under chapter 269 of the Laws of 1880, to review the proceedings of the commissioners, to which a return was made by them, and upon the hearing the order was made setting aside the assessment. The sole question relates to the jurisdiction of the commissioners of taxes to make the assessment of the relator's property as finally entered in the roll.

Section 4 of the act of 1880, under which the relator proceeded, provides that, ‘if it shall appear by the return to such writ that the assessment complained of is illegal, erroneous or unequal for any of the reasons alleged in the petition, the court shall have power to order such assessment, if illegal, to be stricken from the roll.’ The complaint is that the assessment was illegal, for the reason that the relator had no capital subject to taxation in the year 1893. It was represented in the statement presented to the commissioners by the relator that its real estate, ‘as per sworn valuation of the deputy tax commissioner,’ was of the value of $1,515,400 and that its total personal property was of the value of $1,041,483.43; making the aggregate value of its whole property, real and personal, the sum of $2,556,883.43. In the items of its personal property are included patent rights and franchises valued at $500,000, and no claim is made that it was entitled to any exemption of any other part of its personal estate from taxation. The statement further represents that the debts of the relator were $2,839,192.98. It thus was made to appear that the debts exceeded the total assets in the sum of $282,309.55, or, in other words, that the relator was an insolvent corporation, and that its capital of $4,000,000, which had been wholly paid in or secured to be paid, had been wholly lost. But, notwithstanding this condition of the relator's affairs, the statement contained the further representation that during the year 1892 the surplus earnings of the corporation over and above operating expenses, leakage, bad debts, and depreciation of plant had been $331,777.25, out of which a dividend of 8 per cent. on the stock, amounting in the aggregate to $320,000, had been declared and paid by the company, The presentation of a statement showing that an insolvent corporation was doing nevertheless a highly successful business, and that out of its net earnings was able to pay a large dividend to its stockholders, naturally challenged inquiry. It was not asserted by the relator that it had sustained recent or large losses, and it gave no explanation of the apparent anomaly disclosed in a comparison of the several facts alleged in the statement. It also appears that the dividend declared in 1892 was not exceptional. A dividend at the same rage out of earnings was declared and paid in 1891. The computation upon which the commissioners reached the result stated in the corrected assessment roll appears in the return made to the writ. They regarded the capital of $4,000,000 as unimpaired. From this sum they deducted $1,527,300, the assessed value of the real estate, and the further sum of $500,000, the value of the patents and franchises, which left $1,972,700, the sum which they fixed upon as the portion of the relator's capital liable to taxation. It will be observed that the assessors made no deduction of the debts from the amount of the capital stock. Debts are deductible in ascertaining the assessable value of the capital of a corporation. People v. Barker, 139 N. Y. 55, 34 N. E. 722. But an unimpaired capital implies that there are assets over and above the capital sufficient to pay any outstanding debts, and, if the commissioners had a right to find, as they did, that the capital of the relator was unimpaired, they were not bound to deduct the debts, since, presumably, they were offset by assets above the capital which otherwise would have been liable to taxation. The commissioners, in their return, referring to the statement presented by the relators, declared that they had ‘carefully considered the same, and accepted as true all the statements of fact therein contained.’ The statement contained nothing in terms upon the subject of the actual value of the relator's real estate. It stated the assessed value only.

The theory of the statute is that real estate, for the purpose of taxation, shall be assessed at its full value. The rule formulated in the Revised Statutes is that ‘all real and personal estate shall be estimated by the assessors at its just and full value, as they would appraise the same in payment of a just debt due from a solvent debtor’ (1 Rev. St. p. 383, § 17; Laws 1851, c. 176), and under the consolidation act (section 814) it is to be assessed ‘at the sum for which such property, under ordinary circumstances, would sell.’ But it is well known that this duty cast upon assessors is seldom performed, and that the taxation of real estate throughout the state is generally upon an assessment which represents but part of its actual value. Assessment at the full value is the exception, and not the rule....