
    The People of the State of New York ex rel. The North American Company, Relator, v. Nathan L. Miller, as Comptroller of the State of New York, Respondent.
    
      Tam on a foreign corporation — under what circumstances a foreign investment company, is subject thereto—-proof as to property on hand being capital and as to its form of investment.
    
    An investment company incorporated under the laws of the State of New Jersey had its principal office in Jersey City, and also maintained an office in the city of New York where its principal business was transacted.
    Its business consisted in purchasing, holding and selling the stocks and bonds of corporations organized under the laws of States other than the State of New • York and doing business outside of the State of New York. All of the business relating to the investment or reinvestment in said stocks and bonds was supervised, if not actually' done, at the New York office.
    During the years ending respectively October 31,1900, and October 31, 1901, the corporation, besides furniture in an office for which it paid over §2,000 rent, and to the employees in which it paid each year in the aggregate wages in excess of §23,000, carried large monthly bank balances in the State of New York, and held in the State of New York a large amount of financial securities. It also held a considerable amount of bills and accounts receivable in the State of New York.
    The treasurer of the corporation testified that it had no surplus during the years in question, and that it had not earned enough to pay a dividend.
    
      Held, that the State Comptroller was justified in imposing a franchise tax and license fee upon the corporation for the years in question;
    That, in view of the testimony of the treasurer of the corporation, .the items above enumerated could not have been surplus or income, and must, therefore, have been capital employed in the State of New York;
    That while there was testimony that all of the capital of the corporation was invested in the stocks and bonds of other foreign corporations, this was a state, ment of a mere conclusion, the correctness of which the Comptroller was tb determine.
    Certiorari issued out of the Supreme Court and attested on the 15th day of August, 1902, directed to Nathan L. Miller, 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 revision and readjustment of the license fee and franchise tax imposed upon the relator for-the years ending October 31, 1900, aiid October 31, 1901.
    The relator is a foreign corporation incorporated under the laws of the State of New Jersey as an investment company, and has its principal office in the city of Jersey City, and also maintains an office in the city of New York, where its principal business is transacted. Its authorized capital during the year ending October 31, 1900, was $50,000,000, of which about $40,000,000 was issued, and during the year ending October 31, 1901, was $12,000,000, of which $11,836,700 was issued, the reduction being made by scaling down • the value of assets consisting of good will, and each stockholder who had 100 shares receiving instead 30 shares. This proceeding is brought to review the determination of the Comptroller upon a revision and readjustment of an account for taxes and for a license against the relator, imposed under the provision's of sections 181 and 182 of the Tax Law (Laws of 1896, chap. 908, as amd. by Laws of 1901, chap. 558).
    
      Alfred Jaretzki, for the relator.
    
      John Cunneen, Attorney-General, and William H. Wood, for the respondent.
   Chester, J.:

If, during the years in question, the relator, in carrying on its business, employed any portion of its capital stock within this State there is no question but that it was liable to that extent for the license fee and tax imposed upon it. Its business was that of an investment company, and consisted in purchasing, holding and selling the stocks and bonds of corporations organized under the laws of States other than the State of New York, and doing business outside of this State. All of the business relating to the investment or reinvestment in said stocks and bonds was supervised, if not actually done, at the New York office. In conducting that business it had and employed within this State, during the years in question, considerable amounts of money on deposit, as well as stocks, bonds and other securities, and thesé moneys and securities, together with á small item of furniture in the New York office, have been made the basis of thé license and tax imposed upon the relator. The capital employed within the State is represented by the money and securities and other property which it has here and which it employs in its business, and formed a. propier basis of taxation. (People ex rel. Union Trust Co. v. Coleman, 126 N. Y. 433; People ex rel. Seth Thomas Clock Co. v. Wemple, 133 id. 323.)

• The relator insists, however, that substantially the same question as is presented in this case for determination was before this court upon a proceeding to review a like tax imposed by the Comptroller ;upon the relator for a former year and that his action in so imposing it was reversed by this court upon the authority of People ex rel, Chicago Junction, etc., Co. v. Roberts (154 N. Y, 1). (People ex rel. North American Co. v, Roberts, 32 App. Div. 631.)

The Chicago Junction case, in the Court of Appeals, upon the 'authority of which the former case was reversed,, was decided by a 'divided court, three of the judges having dissented from the prevailing opinions, and can hardly be regarded as a controlling authority for a case so unlike it as the one here. There the purpose for which the corporation was organized was to inyest its capital in the stock and bonds of an Illinois corporation and its whole capital was so invested, and the entire business transacted in this State was to receive and distribute the dividends or income derived from such investment. It was held that, although the corporation was doing ..business in this State, no part of its capital was employed here.

So, too,, the former: case' in this court (32 App. Div, 631) was decided on the facts then here and which led’ the court to the conclusion that none of the capital of the relator was employed in this State during the year for which the tax was imposed, but here the .record shows that substantially all its business is done in this State'; that in the year ending October 31, 1900, the relator had an office in New York city for which it paid an annual rent of $2,227.74, liaving furniture therein of'the value of $1,500 ; that it paid salaries to certain officers, clerks and stenographers employed in the city of New York, amounting to $23,495.12; that its average monthly bank balances carried in the' State was $107,564.60 ; that its average amounts of stocks, bonds, loans on call or other financial securities held in the State against other corporations, joint .stock companies, associations or individuals was $91,750.47, and that the, average amount of bills and accounts receivable in New York was $16,666.66,

' The record also shows that in the year ending October 31, 1901, it paid $2,316.72 .réntala in New York; that its office furniture there was of the value of $1,000; that it paid $23,998.47 salaries to persons employed by it in this State; that its average monthly bank balances carried in this. State was $491,963.83; that its average amount of stocks, bonds, loans on call or other financial securities held in this State against other corporations, joint stock companies, associations or individuals was $787,597.20, and that the average amount of its bills and accounts receivable was $22,866.66.

The treasurer of the relator testified that it had no surplus during the years in question. Therefore, the items above mentioned could not have been surplus. His testimony, also, was that up to the date of the imposition of the tax the company had not earned enough to pay a dividend. That being so, these items were not income. They must, therefore, have been capital and capital employed within the State. It is true that there was also testimony that all of the relator’s capital was invested in the stocks and bonds of other foreign corporations, but that was the statement of a mere conclusion which, with the facts above recited before him, required the Comptroller to determine whether or not the conclusion was correct.

The Comptroller decided that it was not, and imposed a tax for the year ending October 31, 1900, on a basis of $200,814, and for tiie year ending October 31, 1901, on a basis of $1,281,833.49, making a total tax for the two years of $2,223.97, and imposed a license fee on a basis of $1,281,833.49, amounting to $1,602.29.

We think under the facts before him he was within the law when he imposed such tax and license fee. The determination should, therefore, be confirmed, with fifty dollars costs and disbursements.

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