Opinion
Argued January 22, 1894
Decided February 6, 1894
David J. Dean for appellants.
Chas. E. Miller for respondent.
The relators were assessed for the purpose of taxation upon capital stock for the year 1892, in the sum of $968,973. In July, 1892, they sued out a writ of certiorari to review the proceedings of the tax commissioners.
The special term of the Supreme Court reversed the adjudication of the tax commissioners and vacated the assessment. The general term, in affirming this order, considered at length the question whether, as a matter of law, the debts of the relator were necessarily deductible from the value of the corporate assets. We are satisfied with its conclusions on that point and will not consider the question at length on this appeal. The respondent company was entitled to have its indebtedness deducted from the value of its corporate assets which constituted its capital stock, or capital, as distinguished from its actual share stock. The rule has been repeatedly recognized by this court. ( People ex rel. Union Trust Co. v. Coleman, 126 N.Y. 433; People ex rel. Edison Electric Illuminating Co. v. Barker, 139 id. 55.) In this last case Judge PECKHAM remarks, at page 63, after considering the indebtedness of the corporation, as follows, viz.:
"This indebtedness must, in the nature of things, be taken into consideration in arriving at the value of the capital of the relator. And when it is seen that the indebtedness of a corporation is double the amount of all its assets, it follows, upon the system adopted by the state for the assessment of corporations, that the actual value of the capital of such a corporation is zero."
The case at bar presented a similar situation. According to the statement furnished by the relators to the commissioners, the following state of affairs was disclosed, viz.:
Real estate, assessed value ................. $531,027.00 Personal property ........................... 590,269.12 _______________ Total ................................... $1,121,296.12 Liabilities ................................. 1,938,873.65 _______________ Excess of liabilities ................... $817,577.52 ===============
The commissioners made up a statement as follows, viz.:
Personal property ........................... $1,500,000 Assessed value of realty .................... 531,027 _______________ Amount subject to tax ................... $968,973 ===============
It is not contended on the part of the commissioners that they deducted the indebtedness.
It is, therefore, of no importance which statement is taken as a basis of computation.
Taking the figures of the commissioners, by which they are certainly concluded, and deduct from the amount of $968,973, they find subject to taxation, the indebtedness of the company of $1,938,873.65, and it is apparent that there is no capital subject to taxation, and the assessment in this case is illegal and must be set aside.
The orders of the special and general terms are, therefore, affirmed.
All concur.
Orders affirmed.