People ex rel. Nat'l Exp. Co. v. Coleman

• Citation: 31 N.E. 96,133 N.Y. 279
• Parties: PEOPLE ex rel. NATIONAL EXP. CO. v. COLEMAN et al., Tax Commissioners.
• Decision Date: 24 May 1892
• Court: New York Court of Appeals

133 N.Y. 279

31 N.E. 96

PEOPLE ex rel. NATIONAL EXP. CO.

v.COLEMAN et al., Tax Commissioners.

Court of Appeals of New York.

May 24, 1892.

Appeal from supreme court, general term, first department.

Proceedings on the relation of Lock W. Winchester, as treasurer of the National Express Company, to review the action of the tax commissioners in taxing the company on its capital stock as a corporation. From a judgment of the general term, affirming a judgment of the special term vacating the assessment, the commissioners appeal. Affirmed.

TAXATION-JOINT-STOCK ASSOCIATION.

A joint-stock association, formed by private agreement between individuals is not taxable under 1 Rev. St. pt. 1, c. 13, tit. 4, s 1, providing that all moneyed or stock corporations, deriving an income or profit from their capital, or otherwise, shall be liable to taxation on their capital in the manner therein prescribed. 13 N. Y. Supp. 833, affirmed.

William H. Clark,(George S. Coleman, of counsel,) for appellants.

James C. Carter, for respondent.

FINCH, J.

The relator was taxed upon its capital, on the ground that it had become a corporation, within the meaning of the provision of the Revised Statutes which enacts that ‘all moneyed or stock corporations deriving an income or profit from their capital, or otherwise, shall be liable to taxation on their capital in the manner hereinafter prescribed.’ 1 Rev. St. pt. 1, c. 13, tit. 4, § 1. The company was formed as a joint-stock company or association, in 1853, by a written agreement of eight individuals with each other, the whole force and effect of which, in constituting and creating the organization, rested upon the common-law rights of the individuals, and their power to contract with each other. The relation they assumed was wholly the product of their mutual agreement, and dependent in no respect upon the grant or authority of the state. It was entered into under no statutory license or permission, neither accepting nor designed to accept any franchise from the sovereign, but founded wholly upon the individual rights of the associates to join their capital and enterprise in a relation similar to that of a partnership. A few years earlier the legislature had explicitly recognized the existence and validity of such organizations, founded upon contract, and evolved from the common-law rights of the citizens. Laws 1849, c. [133 N.Y. 282]258. That act provided that any joint-stock, company or association which consisted of seven or more members might sue or be sued in the name of its president or treasurer, and with the same force and effect, so far as the joint property and rights were concerned, as if the suit should be prosecuted in the names of the associates; but the act explicitly disclaimed any purpose of converting the joint-stock associations recognized as existing into corporations by a section prohibiting any such construction. Section 5. In 1851 the act was amended in its form and application, but in no respect material to the present inquiry. There is no doubt, therefore, that, when the company was formed and went into operation, the law recognized a distinction and substantial difference between joint-stock companies and corporations, and never confused one with the other; and that the existing statute which taxed the capital of corporations had no reference to or operation upon joint-stock companies or associations. But two things have since occurred. The legislature, while steadily preserving the distinction of names, has, with equal persistence, confused the things, by obliterating substantial and characteristic marks of difference; until it is now claimed that the joint-stock associations have grown into and become corporations by force of the continued bestowal upon them of corporate attributes. It is said, and very probably crrectly said, that the legislature may create a corporation without explicitly declaring it to be such, by the bestowal of a corporate franchise or corporate attributes, and the cases of banking associations are referred to as instances of actual occurrece. Thomas v. Dakin, 22 Wend. 9; Bank v. Watertown, 25 Wend. 686;People v. Niagara, 4 Hill, 20. It is added that such result may happen even without the legislative intent, and because the gift of corporate powers and attributes is tantamount to a corporate creation. It is then asserted that a series of statutes, beginning with the act of 1849, has ended in the gift to joint-stock associations of every essential attribute possessed by and characteristic of corporations, (Laws 1853, c. 53; Laws 1854, c. 245; Laws 1867, c. 289;) that the lines of distinction between the two, however far apart in the beginning, have steadily converged, until they have melted into each other and become identical; that every distinguishing mark and characteristic has been obliterated; and no reason remains why joint-stock associations should not be, in all respects, treated and regarded as corporations. Some of this contention is true. The case of People v. Wemple, 117 N. Y. 77, 22 N. E. Rep. 1046, shows very forcibly how almost the full measure of corporate attributes has, by legislative enactment, been bestowed upon joint-stock associations, until the difference, if there be one, is obscure, elusive, and difficult to sec and describe. And yet the truth remains that all along the line of legislation the distinctive names have been retained as indicative and representative of a difference in the organizations themselves. As recently as the acts of 1880 and 1881, which formed the subject of consideration in the Wemple Case, the legislature, dealing with the subject of taxation, and desiring to tax business and franchises, imposed the liability upon ‘every corporation, joint-stock company, or association whatever, now or hereafter incorporated or organized under any law of this state.’ It is significant that the words ‘or organized’ were inserted by amendment, and evidently for the understood reason that joint-stock companies could not properly be said to be ‘incorporated,’ but might be correctly described as ‘organized’ under...