People ex rel. Hecker-Jones-Jewell Milling Co. v. Barker

• Decision Date: 08 October 1895
• Citation: 41 N.E. 435,147 N.Y. 31
• Parties: PEOPLE ex rel. HECKER-JONES-JEWELL MILLING CO. v. BARKER et al., Tax Commissioners.
• Court: New York Court of Appeals Court of Appeals

147 N.Y. 31

41 N.E. 435

PEOPLE ex rel. HECKER-JONES-JEWELL MILLING CO.

v.BARKER et al., Tax Commissioners.

Court of Appeals of New York.

Oct. 8, 1895.

Appeal from supreme court, general term, First department.

Certiorari by the Hecker-Jones-Jewell Milling Company against Edward P. Barker and others, commissioners of taxes, to review assessment of relator's personal property. The order of the special term dismissing the writ was affirmed by the general term (33 N. Y. Supp. 221), and the relator appeals. Modified.

John M. Bowers, for appellant.

D. J. Dean, for respondents.

PECKHAM, J.

The above relator obtained two writs of certiorari under chapter 269 of the Laws of 1880, for the purpose of reviewing the action of the above defendants in assessing the relator for all sums invested in its business in this state in the years 1893 and 1894, a separate writ having issued for each assessment. The defendants were commissioners of taxes, and composed the board of taxes and assessments of the city and county of New York, and they made an assessment in each of the above years against the relator, which is a foreign corporation having money invested in this state; such assessment being based upon the provisions of the act, chapter 37 of the Laws of 1855, one section of which reads as follows: ‘All persons and associations doing business in the state of New York as merchants, bankers or otherwise, either as principals or partners, whether special or otherwise, and not residents of this state, shall be assessed and taxed on all sums invested in any manner in said business the same as if they were residents of this state, and said taxes shall be collected from the property of the firms, persons or associations to which they severally belong.’ The relator disputes the validity of each assessment. The defendants, in 1893, assessed the relator at a certain sum, after deducting that portion of its indebtedness which they decided had been incurred in this state in the purchase of property herein; and in 1894 they made an assessment without deducting any of the indebtedness of the relator whatever. The relator claims that the defendants, in 1893, did not deduct all its indebtedness which had been incurred in the purchase of property within this state, and that, if they had done so, there would have been no assessment made against it here. It also claims that the assessment of 1894 was void because of the refusal of the defendants to make any deduction whatever for any indebtedness. The reason for the difference in the two assessments is based by the defendants upon the decision of this court in People ex rel. Thurber-Whyland Co. v. Barker, reported in 141 N. Y. 118, 35 N. E. 1073. That case was decided here subsequent to the assessment of [147 N.Y. 35]1893 and prior to that of 1894. The defendants were of opinion that the decision in question covered this case, and obliged them to assess the relator without making any deduction for any indebtedness whatever, even though such indebtedness, or some portion thereof, were incurred in the purchase of the assets in this state, for which the assessment of 1894 was made.

Prior to the time for finally making the assessment for each of the two years 1893 and 1894, respectively, the relator rendered to the defendants a verified written statement of the condition of the company as of the second Monday of January in each of such years. The statement of 1893 shows that the total gross assets in all parts of the world then belonging to the relator amounted to $4,615,326.07, and from that sum it was claimed should be deducted the amount assessed against it for its real estate, being $451,300, and the sum of $2,500,000 for bonds issued by it, and also $2,567,000 for further indebtedness incurred by it in the course of its business, thus claiming a total of deduction for indebtedness (including the assessment for real estate) of $5,518,300, or almost $1,000,000 of debts over assets, and reducing the assessment, of course, to nothing. It does not appear that any receiver of the company has been appointed or applied for, or that any proceedings have been taken or were contemplated for the winding up of what by these statements would appear to be a hopelessly insolvent concern. The president of the company was examined in regard to the assessment of 1893, before the commissioners; and he testified that the company was organized August 27, 1892, less than seven months prior to the making of this statement. The president further testified that the nominal capital was $5,000,000, $2,000,000 of preferred and $3,000,000 of common stock; that $2,000 in cash were paid into the treasury for 20 shares of its capital stock at par, and that sum was paid out for corporation expenses. He was unable to state whether, in issuing the stock at the time the company was organized, it acquired anything beyond the tangibleassets of the firm or parties whose property was purchased. The first meeting of the directors was held August 27, 1892; and at that meeting its bonds, secured by mortgage, were issued, and 820 of them, of $1,000 each, were sold for cash at par, and the money brought into New York, and deposited in the bank with which the company did business, and was subsequently used for the purchase of merchandise used by the company. The question was then asked of him, ‘And the rest of the capital stock and the balance of the bonds were issued in exchange for real and personal property?’ and he answered, ‘Yes.’

From this statement of 1893, and from the examination of the president of the company, it appears that all but $2,000 of its capital stock of $5,000,000, and the $2,500,000 of its bonds, had been issued in exchange for property, real and personal, between the 27th day of August, 1893, and the second Monday of January, 1894, the cash for the $820,000 of bonds issued having been used for the purchase of merchandise. Further than this, it appears that $2,567,000 of further indebtedness had been incurred upon its notes for borrowed money, loans to it on collateral, and on bills for merchandise. This would make about $10,000,000 invested by the relator within this short period, and yet it makes a statement that its total gross assets existing on the second Monday of January, 1893, amounted to but $4,615,326.07. No explanation is vouchsafed for these seemingly most unfortunate investments. It might, perhaps, be thought there was a mistake in the record from which I have quoted, and that the stock had in fact never been issued to any such amount. The statement for 1894 would seem to show there was no mistake of that nature, for it is there stated that the entire share capital, except the 20 shares already spoken of, and the entire issue of bonds, except the 820 sold for cash, were exchanged for property,-$10,000,000 of investments in five months, and at the end thereof less than $5,000,000 left. In January, 1895, its relative condition was about the same. Its gross assets had shrunk from $4,615,326.07 to $3,466,919, being considerably over $1,000,000, but its indebtedness was less by $1,046,500. And yet this (seemingly) insolvent corporation is paying interest on its bonded indebtedness and dividends upon its stock. These facts call for explanation. There is no doubt that the astute and able counsel for the city would have made the effort to obtain it had not the...