
    The People of the State of New York ex rel. Long Dock Mills and Elevator, Relator, v. William C. Wilson, Deputy and Acting Comptroller of the State of New York, Respondent.
    Third Department,
    September 26, 1907.
    Tax — foreign ^corporation — franchise tax — when capital employed in this State — computation of capital.
    Although all the original capital of a foreign corporation was invested in the foreign State, when it subsequently invests accumulated dividends in active business in this State, it-is subject to a franchise tax.
    Although such moneys are invested in- structures on leased lands which may become the property of the landlord, the capital is employed in this State.
    When a foreign corporation has all of its original capital, amounting to $25,000, invested in the foreign State, and after investing §12,500 of accumulated' dividends in this State, declares a dividend of §50,000, such dividend should be estimated as paid upon a capital of §37,500.
    Certiorari issued out of the Supreme Court and attested on the 18th day of July, 1906, directed to William C. Wilson, as Deputy and Acting 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 a franchise tax imposed upon the relator- for the year ending October 31, 1904.
    The relator is a foreign corporation organized under the laws of the State of New Jersey, and having its principal office at Jersey City.- It also has a branch office in the city of New York. Its business is- that of buying and selling grain, hay and- feed, and storing the same. Its capital stock, as provided by its articles of incorporation, was $25,000. It began business by buying a mill in New Jersey and paying $22,000 therefor, and the remaining $3,000 was invested in personal property in New Jersey. No dividends were paid for the first three years, and a large amount accumulated, to wit, about $125,000, which the relator calls surplus. This accumulation was at least in part reinvested in the active business of the corporation, and the moneys expended in New York State and taxed here are undoubtedly part of this accumulation. The dividends paid within the last year amounted to $50,000, This was assumed by the Comptroller to be 200 per cent upon the $25,000 of capital named in the certificate of incorporation, and the tax was assessed upon that basis. After a rehearing the Comptroller refused to reduce the assessment, arid by this writ the relator seeks to have the determination reviewed.
    
      A. Dudley Britton, for the relator.
    
      George P. Decker, Deputy Attorney-General, and William S. Jackson, Attorney-General, for the respondent.
   Smith, P. J.:

We.do not agree that the relator should be entirely exempt from taxation on the ground that all of its capital was employed within the State of Yew Jersey, and that the amount held to have been employed as capital within this State is a part of the company’s surplus. To uphold such a contention would be to open the way to an easy evasion of the Tax Law of this State. (See, also, People ex rel. Commercial Cable Co. v. Morgan, 178 N. Y. 433.) In the case cited Judge Werner, in writing for the court, says: In construing this section of the Corporation Tax Law, the authorized issue of the share stock of a corporation needs to be considered only as fixing the limit beyond which a corporate franchise cannot be taxed in a case where all of the corporate capital is employed within this State.”

Yor can it be'material that the money was expended upon leased ground, and that the structures erected thereby might become in law the property of the owner of the ground. It is nevertheless capital employed within this State whether invested in structures upon leased ground or upon ground that was the property of the corporation itself. *

If these moneys be deemed a practical increase of capital stock, as is suggested by Judge Bartlett in People ex rel. Singer Mfg. Co. v. Wemple (150 N. Y. 46), then the dividend should be estimated as- a dividend upon the increased amount of capital stock. The capital stock authorized by the charter tó the amount of $25,000 was actually invested in Yew Jersey. It appears that the amount of $12,500 in round numbers was in addition invested in this State. The $50,000 of dividends should be estimated then as paid upon a. capital stock .of $37,500,, instead' of upon a capital stock of $25,000. ' Otherwise the surplus' actively used in this State would be deemed capital stock for the purpose of taxation, but - not capital stock for the purpose of determining the amount of taxation. . This would he an unnecessary, construction of the statute, and in my judgment an unjust one. The assessment should, therefore, be modified to this extent, and as modified the determination of the Comptroller should be affirmed, without costs.

All concurred.

Determination of the Comptroller modified as per opinion, and as so modified affirmed, without costs; .  