People ex rel. McClure Publications, Inc. v. Purdy

Scott, J.: The relator’s petition for a writ of certiorari shows that on October 1, 1912, its name and a valuation of its capital stock and surplus profits were entered in the assessment roll, and that on or before November 30, 1912, application was made to the commissioners of taxes and assessments for a review and correction of said assessment, which was denied, and the valuation of the capital stock was fixed and confirmed at the sum of $50,000. At the time the relator presented its application for a review . and reduction of its assessment, it filed with the commissioners a verified document purporting to contain a true statement of its assets and indebtedness. That statement showed that the capital stock actually issued was $2,900,000. The assets were stated to be of the total gross value of $2,919,378.99, of which by far the greater amount represented “ value at which patent rights, copyrights, trade-marks, good will and franchises were taken in payment for capital stock.” The'liabilities were stated at $213,773.04, leaving an apparent excess 'of assets over liabilities of $2,705,605.95. This was less than the amount of the .outstanding capital stock, and consequently it appeared upon the face of the statement' that the relator had no surplus, for the surplus of the corporation has been defined to be “the accumulations of the company of moneys or property in excess of the par value of the stock issued by it.” (People ex rel. Manhattan R. Co. v. Barker, 165 N. Y. 305, 339.) The relator’s statement also contained a statement of the [543] deductions which it claimed should be made from its list of assets for the purpose of assessment for taxation. These aggregated $2,850,197.40, exclusive of a surplus which relator claimed should be deducted, and the refusal to deduct which has led to this proceeding. Disregarding the surplus, the statement showed that the value of. the assets exceeded the allowable deductions by $69,181.59, which appeared to be the actual taxable value of relator’s capital, and justified its assessment at $50,000. The relator in its statement claimed that it had a surplus of $103,038.79, which sum, being less than ten per cent of its capital stock, should as it is claimed have been deducted from its taxable assets, leaving nothing to be assessed. Prom relator’s own statement of assets and liabilities, which the tax commissioners were justified in accepting as true, it appeared to a mathematical demonstration that there was not and could not be any surplus because, as already said, the net assets over and above the liabilities amounted to less than the outstanding capital stock. The relator now insists that it is entitled in this proceeding to prove that in fact it had a surplus, notwithstanding the figures it gave as to its assets and liabilities conclusively show the contrary. That is, it now seeks to show by its books or otherwise that its own statement of its assets and liabilities was false or erroneous. The petitioner relies upon People ex rel. Manhattan R. Co. v. Barker (152 N. Y. 417) and numerous other kindred cases in which it has been held that a tax certiorari like the one now under consideration permits a new trial of the question of the relator’s assessability and a redetermination of all questions relating thereto upon new evidence taken by the court. There is no doubt about this proposi-' tion. The question is whether the relator has put itself in a position to take advantage of it. As was said in the case cited: “ The petition is regarded as the complaint, the return as the answer, and, in deciding the issues joined thereby, the court may call witnesses to its aid and their testimony becomes a part of the proceedings upon which the determination of the court is to be made.” What is to be tried by the court are “ the issues raised by [544] the pleadings,” to wit, the petition and the return. Turning to those in the present case we find no allegation of error in any fact contained in the statement filed with the commissioners and followed by them in fixing the assessment, except a slight correction as to the amount of capital outstanding which does not affect any question at issue here. What the relator does, and all that it does, is to assert that it had a surplus of $103,038.79, notwithstanding the fact that its own figures as to the amount of its assets, and of its capital stock, which are not claimed to be erroneous and are not sought to be changed, except in the immaterial particular noted, demonstrate mathematically that it had no surplus. A surplus is not a concrete, primary fact, but is a conclusion of fact to be ascertained by the comparison of a corporation’s assets with the amount of its capital stock. To show that the tax commissioners had erred in not deducting from relator’s taxable assets a certain sum for surplus, the relator should have alleged what its capital stock is and what its assets are. Then perhaps it would have tendered an issue to be tried. But it has done no such thing. It simply asserts that “ On October 1, 1912, your petitioner had actually earned from the savings or accumulations of its business the surplus of $103,038.79.” It does not even allege that it was then in possession of that surplus, or that it was represented in its assets. On the other hand, the statement of assets not sought to be corrected shows conclusively that such assets could not then have included any surplus at all. In my opinion there was no issue to be tried and the writ was properly dismissed. The order appealed from should be affirmed, with costs and disbursements. McLaughlin, Laughlin and Clarke, JJ., concurred; Ingraham, P. J., dissented.