People ex rel. Commonwealth Insurance v. Coleman

Van Brunt, P. J. In the able opinion delivered by the learned justice who heard this case in the court below, the manner in which the tax commissioners may determine the value of the capital stock of a corporation for the purposes of taxation is entirely correctly set forth, and is in accordance with the principles laid down by the court of appeals in the case of People v. Asten, 100 N. Y. 597, 3 N. E. Rep. 788, referred to by him. But there is one point which we think has been overlooked in the consideration of this assessment of the value of the capital stock. It is undoubtedly true that, after an estimate of the value of the capital stock has been made, there is no authority for the deduction of the indebtedness of the corporation, but it is also true that the indebtedness of a corporation is a proper subject for consideration in estimating the value of the stock; and, in the conclusion at which the learned justice arrived in this ease in determining the value of the capital stock, the indebtedness of the corporation was not considered. There being no market for the stock of this company, its value was attempted to be ascertained by determining the value of its assets; and the aggregate value of its assets was @345,885.21. If, however, the corporation was indebted, this did not represent the actual value of its capital stock, because such value was reduced by the amount of its indebtedness. All the assets going to make up this aggregate had been assessed at their full market value, no deduction whatever being made therefrom. Consequently the value of those assets was diminished in determining the value of the capital stock by the amount of the indebtedness. Therefore, deducting the amount of the indebtedness, which it is con [667] ceded amounted to $24,666.16, the total value of the capital stock of the corporation was $821,219.05. This deduction, however, the learned judge challenged, upon the ground that it was improper to consider this indebtedness in ascertaining the value of the capital stock of a corporation liable to taxation. In this it appears he has fallen into an error. It would be improper to deduct such indebtedness after having determined the value of the capital stock, because that would be deducting the indebtedness twice; but, in estimating the value of the stock, the indebtedness of the corporation is a proper subject for consideration. Of this value of $321,219.05 the sum of $304,575 consisted of government bonds, as to which the company was entitled to exemption. The amount of surplus, therefore, which the corporation had, was $16,644. But it was not liable to taxation upon this surplus, because it was entitled to exemption upon surplus until such surplus exceeded 10 per cent, of its capital,—in this case $30,000. The surplus in the case at bar was within this sum, and consequently the corporation was not liable to taxation. We are of opinion, therefore, that the judgment of the special term should be reversed, and the assessment vacated. Brady and Bartlett, JJ., concur.