People ex rel. Manhattan Ry. Co. v. Barker

• Decision Date: 11 June 1895
• Parties: PEOPLE ex rel. MANHATTAN RY. CO. v. BARKER et al., Commissioners of Taxes.
• Court: New York Court of Appeals Court of Appeals

146 N.Y. 304

40 N.E. 996

PEOPLE ex rel. MANHATTAN RY. CO.

v.BARKER et al., Commissioners of Taxes.

Court of Appeals of New York.

June 11, 1895.

Appeal from supreme court, general term, First department.

Certiorari, on the relation of the Manhattan Railway Company, against Edward P. Barker and others, to set aside a tax assessment. From an order of the general term (33 N. Y. Supp. 1132, mem.), reversing an order of the special term setting aside the assessment, the relator appeals. Reversed.

John F. Dillon, Julien T. Davies, and Herbert Barry, for relator, appellant.

David J. Dean, for respondents.

HAIGHT, J.

On the 8th day of January, 1894, the commissioners of taxes and assessments of the city of New York assessed the relator, the Manhattan Railway Company, for its personal property at the sum of $30,000,000. In the month of April thereafter, the relator filed a statement upon one of the blank forms furnished by the department of taxes and assessments showing its condition on the second Monday of January, 1894. An examination of the treasurer of the company was thereupon had by the commissioners, who then reduced the assessment, and fixed it at the sum of $17,860,712. The relator thereupon procured a writ of certiorari directed to the tax commissioners, commanding them to make return of the proceedings had before them to the special term of the supreme court, in order that a review might be had before that court. Upon the returns so made by the commissiners, a hearing was had by the court in November, 1894, upon which an order was entered vacating the assessment. Upon an appeal to the general term this order was reversed, and the assessment as made reinstated. The statement furnished by the relator to the commissioners of taxes and assessments is substantially as follows:

+------------------------------------------------+
                ¦Total gross assets                  ¦$11,071,315¦
                +------------------------------------+-----------¦
                ¦Capital stock acutally paid in or   ¦           ¦
                +------------------------------------+-----------¦
                ¦secured to be paid in               ¦29,925,200 ¦
                +------------------------------------+-----------¦
                ¦Amount of surplus earnings          ¦5,326,432  ¦
                +------------------------------------------------¦
                ¦Rate of Dividend for last year or last annual   ¦
                +------------------------------------------------¦
                ¦dividend, 6 per cent.               ¦           ¦
                +------------------------------------+-----------¦
                ¦                                    ¦           ¦
                +------------------------------------+-----------¦
                ¦Indebtedness in detail as follows:  ¦           ¦
                +------------------------------------+-----------¦
                ¦Mortgage bonds outstanding,         ¦           ¦
                +------------------------------------+-----------¦
                ¦Manhattan Railway Company           ¦$11,663,035¦
                +------------------------------------+-----------¦
                ¦Mortgage bonds outstanding, New     ¦           ¦
                +------------------------------------+-----------¦
                ¦York Elevated Railway Company       ¦8,500,000  ¦
                +------------------------------------+-----------¦
                ¦Debenture bonds outstanding, New    ¦           ¦
                +------------------------------------+-----------¦
                ¦York Elevated Railroad Company      ¦1,000,000  ¦
                +------------------------------------+-----------¦
                ¦Total                               ¦$21,163,035¦
                +------------------------------------+-----------¦
                ¦Assessed value of real estate, New  ¦           ¦
                +------------------------------------+-----------¦
                ¦York Company structure              ¦$ 4,128,000¦
                +------------------------------------+-----------¦
                ¦Structure, formerly Suburban        ¦           ¦
                +------------------------------------+-----------¦
                ¦structure                           ¦1,101,700  ¦
                +------------------------------------+-----------¦
                ¦In fee, as per statement            ¦1,946,000  ¦
                +------------------------------------+-----------¦
                ¦Leasehold, as per statement         ¦62,000     ¦
                +------------------------------------+-----------¦
                ¦In fee, Suburban                    ¦85,500     ¦
                +------------------------------------+-----------¦
                ¦Total                               ¦$ 7,323,200¦
                +------------------------------------+-----------¦
                ¦Rolling stock                       ¦$ 1,983,739¦
                +------------------------------------+-----------¦
                ¦Supplies, tools, etc                ¦381,538    ¦
                +------------------------------------+-----------¦
                ¦Cash                                ¦1,382,838  ¦
                +------------------------------------+-----------¦
                ¦Total                               ¦$ 3,748,115¦
                +------------------------------------+-----------¦
                ¦Amount invested in the capital stock¦           ¦
                +------------------------------------+-----------¦
                ¦of the Metropolitan Elevated        ¦           ¦
                +------------------------------------+-----------¦
                ¦Railroad Company which is taxed     ¦           ¦
                +------------------------------------+-----------¦
                ¦upon its capital                    ¦$ 7,075,200¦
                +------------------------------------+-----------¦
                ¦Amount invested in United States    ¦           ¦
                +------------------------------------+-----------¦
                ¦securities, 10 per cent, of capital ¦           ¦
                +------------------------------------+-----------¦
                ¦($29,925,200)                       ¦2,992,520  ¦
                +------------------------------------------------+
                

It also appears from the statement that the mortgage and debenture bonds of the New York Elevated Railroad Company are direct obligations of the Manhattan Company by reason of the merger of the New York Elevated Railroad Company into the Manhattan Company, and that no portion of the indebtedness mentioned was incurred in the purchase of nontaxable property or securities for the purpose of evading taxation. In the testimony given by the treasurer of the Manhattan Company before the commissioners it is stated: That ‘the present authorized capital stock of the Manhattan Railroad Company is $30,000,000. Of that amount $29,925,200 has been issued. Of that amount $7,800,000 has been issued to the shareholders of the New York Company, merging that company with the Manhattan. At present, and since the second Monday of January, 1894, the merger of the Metropolitan Company has been completed, and $7,150,000 of the capital of $30,000,000 has been issued to the Metropolitan Company. When this return was made, a few shares of the Metropolitan were outstanding not exchanged, and for that reason the return was made somewhat short of $30,000,000 as the actual capital stock. The capital stock of the Manhattan Company to the extent of $4,000,000 has been issued to take in the Suburban Company, and was used in connection with the merger of that company. The original capital stock of the Manhattan was $13,000,000. When this capital was increased to $30,000,000 for the purpose of completing the merger of the New York and Metropolitan Companies with the Manhattan, the agreement of the merger provided that capital stock of the Manhattan should be issued to the holders of this $13,000,000 of stock at 85 per cent., or that capital stock in par value of $11,050,000 has been issued to the old stockholders of the Manhattan Company who held the original $13,000,000. That $13,000,000 was originally issued in connection with the leasing to the Manhattan of the New York and Metropolitan Companies, and the stockholders of those two companies respectively received $6,500,000 of the capital stock of the Manhattan Company as the consideration for the making of these leases.’ If further appears from his testimony that the $5,326,432 entered in the statement as the amount of surplus earnings was the amount of the earnings of the company over and above the dividends; that such surplus appeared upon the books of the company, but was not in fact now existing, for the reason that it had been expended, and was now represented by the real and personal property included in the statement, with the exception of the $1,382,838 cash on hand. The commissioners in their return state that the method by which they made their assessment was as follows: ‘At the time that we fixed the assessment against the relator at the sum of $17,860,712, we had before us and considered the statement filed with us by the above-named relator upon its application for a reduction and cancellation of an assessment against it for the year 1893; and we were further advised and informed by the records in our office touching the proceedings had upon the application by this relator for a reduction and cancellation of an assessment against it for the year 1893 that the relator had then admitted its liability to and assented to an assessment against its personal property in the sum of $12,529,915; and, having compared the statement of the relator filed in 1893 with the statement filed by the relator upon its application for a reduction and cancellation of the assessment against it for the year 1894, we concluded that the assessment against it for the year 1894 in the sum of $17,860,712 would be in all respects just and fair; that accordingly we fixed the assessment for the year 1894 at that figure.’

In 1893 some controversy arose over the amount of the assessment of the relator's personal property, which resulted in Mr. Davies, the attorney for the relator, addressing a letter to the commissioners, in which he states that Mr. Gould had authorized him to say that, if the assessment did not exceed $12,500,000, they would acquiesce. The statement made in 1893 has some slight variations from that made in 1894, but is substantially the same, with the exception that the amount of surplus reported in 1894 is nearly $1,000,000 in excess of that of 1893, so that if the commissioners, in fixing the amount of the assessment for 1894, acted upon the statement made in 1893 as compared with that made of 1894, and the letter addressed to them by Mr. Davies, they could not well have increased the assessment in 1894 more than $1,000,000 or thereabouts, the amount...