
    The People of the State of New York ex rel. Metropolitan Securities Company, Relator, v. Otto Kelsey, as Comptroller of the State of New York, Respondent.
    
      Tax to be paid by a corporation which has declared no dividends — appraisal by the Comptroller—he is not limited by themarket value of the stock—the surplus must be'included—what shows his dissatisfaction with the appraisal of the secretary .< or treasurer.
    
    Where the Comptroller of the State of New York, when fixing the tax to be paid, by a corporation which has declared no dividends during the year, is dissatisfied With the appraisal of the value of the capital stock of the corporation made by its secretary or treasurer pursuant to section 190 of the Tax Law (Laws of 1896, chap.. 908), and elects to reject such appraisal and to make his own appraisal, as he is permitted to do by that section of the Tax Law, he is not limited by the average market price for which the stock sold during the year except that he is required to appraise it at not less than such average market price.
    The rejection of the appraisal made by the secretary or treasurer of the corporation and the making of a new appraisal by the Comptroller himself is sufficient evidence of his dissatisfaction with the appraisal of the secretary or treasurer.
    In estimating the value of the capital stock, the surplus of the corporation is properly included therein.
    Certiorari issued out of the Supreme Court and attested on the 5th day of July, 1904, directed to -Otto Kelsey, as Comptroller of the State of New York, commanding him to certify and return to the office of the clerk of the county of Albany all and singular his proceedings had in relation to the assessment of a franchise tax against the relator for the year ending October 31, 1903.
    
      Joseph P. Cotton, Jr., W. B. Bell and Guthrie, Cravath & Henderson, for the relator.
    
      John Cunneen, Attorney-General, and William H. Wood, Deputy Attorney-General, for the respondent.
   Smith, J.:

During the year ending October 31, 1903, the relator paid no dividend upon its stock. Under section 182 of the Tax Law (Laws of 1896, chap. 908, as amd. by Laws of 1901, chap. 558) it was liable to an assessment of one and one-half mills upon each dollar of the appraised capital employed within the State. By section 190 the treasurer or secretary of the company is required to “ estimate and appraise the capital stock of such company upon which no dividend has been declared * * * at its actual value in cash, not less, however, than the average price which said stock sold for during said year, and shall forward the same to the Comptroller with the report provided for in the last. section.” It is then provided by the section : “ If the Comptroller is not satisfied with the valuation so made and returned he is authorized and empowered to make a valuation thereof, and settle an account upon the valuation so made by him, and the taxes, penalties and interest to be paid the State.” The relator has two complaints of the Comptroller’s assessment: First, ■that the Comptroller did not follow the average price which said stock sold for during the year, and, second, that in appraising the value of the stock he has included a sum which has been called surplus by the corporation.

Neither complaint of the relator is well grounded. The estimate and appraisal value to.be made by the secretary or treasurer of the company in the first instance is of actual value,, not less than the average market price. That, estimate and appraisal may be disre- ‘ garded by the Comptroller if lie be dissatisfied therewith, and he may himself estimate and appraise the value of the capital -stock at a sum not less than the average market price. The relator relies upon the case of People ex rel. Colonial Trust Company v. Morgan, (47 App. Div. 126), decided .in this department. That case does not sustain his contention. An extract is quoted from the opinión of Mr. Justice Herrick wherein what was said was entirely unnecessary to- the decision, and in connection with the rest of his opinion can hardly be said to bear out the interpretation which relator’s cotinsel has given thereto. The statute seems to me clear. It calls for a valuation first by the secretary or treasurer of the company, and afterwards by the Comptroller. That valuation is in no way limited by the average market price of sales of stock except that it shall not be less than such average market price. It is urged there is nothing to. show that the Comptroller is dissatisfied with the estimate or appraisal of the company’s treasurer. It would seem, however, that the rejection of such appraisal and the making of new appraisal by the Comptroller himself would be sufficient evidence of his dissatisfaction with the appraisal of the treasurer.

Nor do I see how the relator can complain that what he calls surplus was considered in estimating the value of the capital stock. In fact, it is difficult to see how the actual value of capital stock can be estimated without including surplus.' The case of People ex relCommercial Cable Company v. Morgan (178 N. Y. 433) furnishes no support for the relator’s contention, as in that case a dividend of more than six per cent had been declared, and it was unnecessary to appraise the value of the capital stock in order to' arrive at the amount updn which the percentage should be reckoned.- In the case of People v. Albany Insurance Company (92 N. Y. 468) Rapallo, J., writing for the court, in speaking of a similar statute (Laws of 1880, chap. 542, as arad, by Laws of 1881, chap. 361), says : Should a corporation earning six per cent or more, withhold all dividends, or pay less than six per cent and accumulate its earnings or employ them as capital to improve its property, it would not thereby escape taxation, for it would then be taxable according to the actual, value of its capital stock, and that value would be increased by the amount of surplus thus accumulated, and it would be taxable at the rate of one and one-half mills upon each dollar of the valuation of such stock. ■ * * * ”

I find no reason for disturbing the conclusion of the Comptroller, and recommend that the determination be confirmed, with fifty dollars costs and disbursements.

Determination of the Comptroller unanimously confirmed, with fifty dollars costs and disbursements.  