
    The People of the State of New York ex rel. Blackinton Company, Relator, v. James A. Roberts, as Comptroller of the State of New York, Respondent.
    
      Corporation — a domestic corporation manufacturing, in another State is subject to the franchise tax — the product on hand, and bank account in this State are taxable.
    
    Upon a return to a writ of pertiorari, issued to review a determination of the • Comptroller in assessing a franchise tax' against a corporation, it appeared that the relator was a domestic corporation organized to" manufacture woolens and textile fabrics; that it did all its manufacturing in Massachusetts; that all its stock was issued in payment for its mills located there and for stock and" supplies contained in the mills; that its general office, its sales, its bank account and the general control and management of its business were conducted within the State of New York.
    
      Held, that the corporation was not exempt from tax as one wholly engaged in carrying on manufacture within this State;
    That the purpose of the exemption granted by chapter .542 of the Laws of 1880, as amended by chapter 522 of the Laws of 1890, was to encourage the maintenance of large manufacturing establishments and the employment of. operatives within the State of New York;
    That, for the purposes of taxation, the hank account of the corporation and the manufactured goods sent to it from its mills in Massachusetts for the purposes of sale in New York city, were taxable here as representing the capital stock employed within the State of New York.
    Certiorari issued out of the Supreme Court and attested on the 22d day of October, 1895, directed to James A. Roberts, 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 Ms proceedings in regard to- assessing a franchise tax against the relator under chapter 542 of the Laws of 1880, and the acts amending the same.
    
      Charles Howard Williams, for the relator.
    
      T. E. Hancock, Attorney-General, and G. D. B. Hasbrouck, Deputy Attorney-General, for the respondent.
   Parker, P. J. :

The relator in the case is a domestic corporation, organized for the purpose: of manufacturing woolens and textile fabrics. It manufactures all its products at Blackinton, in the State of Massachusetts. Its mills are located there, and all of its capital stock, viz., $600,000, was issued in payment for the same, and for stock and supplies contained therein, at the time the company was organized. All the rest of its business is carried on in the city of New York.

It has been assessed by the Comptroller as a. corporation liable to .a franchise tax under the provisions of chapter 542 of the Laws of 1880 and the several acts amendatory thereof, and" the matter now comes before us upon a certiorari to review such assessment.

The relator claims that it comes within the exemption from such tax contained in section 3 of such act, as amended by chapter 522 ■of the Laws of 1890.

The Comptroller claims that it is not within any exemption there provided for.

A careful reading of that section, so far as it is applicable to this ■case, and as it is construed by the Court of Appeals in People ex rel. A. C. & D. Co. v. Wemple (129 N. Y. 558) and in Tiffany Gane (People ex rel. Tiffany & Co. v. Campbell, 144 id. 166), shows that it provides as follows: Every corporation, now or hereafter incorporated or formed under the laws of this State, shall be liable to pay a tax upon its franchise or business, unless it shall be a manufacturing corporation wholly engaged in carrying on manufacture within this State.

The relator is a corporation ; it is also a manufacturing corporation, and the precise question presented is, therefore, this: Is it wholly engaged in carrying on manufacture within this State ? ”

No particular consideration need be given to the word “ wholly ” in this case, because it is plain that the corporation has no other business than that of manufacturing, and also that no part of its raw material or products are made up or manufactured in this State.

The question presented is, not as to the force and effect of the word wholly,” but as to the meaning and purpose of the phrase carrying on manufacture within this State.”

The relator’s general office, its sales, its bank account and the general control and management of its business, are all carried on in this State, but its manufacturing plant,, its employees in the business of manufacturing its goods, the work which they perform and the wages paid to them, are neither of them located or carried on within this State.

In other words, a large part of the business is carried on within this State, but the entire business óf manufacturing its products is carried on in another State.

"Within the literal reading of this section it is clear that the relator'is not exempted from the franchise tax. It is not engaged in carrying on mamjfacture within this State. ■ •

The relator’s counsel, however, insists that when a domestic manufacturing corporation carries on all its general business in this State, it is too narrow a construction of the law to hold it liable to the tax, simply because its shops are located and its manufacturing done-in another State.

But that suggests the question, why is a manufacturing corporation exempted from the tax any more than any other corporation ? ' and "the principal reason that naturally'occurs to us, and the one that has been repeatedly recognized by the courts, is the desire on the part of the State to bring within its borders the advantages which attend the maintaining of large manufacturing establishments and the employment of many men therein (Thomas Clock Case [People ex rel. Seth Thomas Clock Co. v. Wemple], 133 N. Y. 323, 326; People v. Horn Silver Mining Co., 105 id. 16, 83), and the very language .used in expressing this exception also suggests such á conclusion. '

It is not given,to all “ manufacturing corporations,”, nor even to those who. are engaged in carrying, on business within this State. But the manufacturing corporation must also be “ engaged in- carrying on" mcmufaeture within this State.”

If this relator was a mining instead of a manufacturing corporation, and did all of its business- in" this State, except that it did all of its mining in another State,-it would seem plain from the language of section , 3 that it did not come within the exception, and. vet the requirement to manufacture is as positive as is the requirement to “mine ores” within the State. Although it has been held that a distinction exists between a domestic and á foreign corporation," so far as a liability to pay any tax under this, section is .concerned (see People ex rel. A. C. & D. Co. v. Wemple, 129 N. Y. 558), .yet so far-as the exemption clamse is, concerned I am unable to. discover any distinction whatever between them. It applies to both alike.

In either case it must be a manufacturing corporation engaged in carrying on manufacture within the State.

If I am correct in this conclusion, this question before ns has been already decided by the Court of Appeals. In the Roebling Case (People ex rel. Roebling’s Sons’ Company v. Wemple, 138 N. Y. 592) a manufacturing corporation doing a large business within this State sought to evade the tax, on. the ground that it ivas engaged in carrying on manufacture within this State. In fact, its manufacturing was done in another State, and a very slight pretense of manufacturing was carried on in this State.

The court held that, although doing business here, it was not carrying on manufacturing here, and, in the opinion of the court, it is said: c<It must be made to appear that actual manufacturing operations are carried on here in the ordinary sense and meaning of the term.” (See, also, People v. Horn Silver M. Co., 105 N. Y. 76-82; People ex rel. S. T. C. Co. v. Wemple, 133 id. 323.) These decisions are authority for holding that not only must the corporation seeking the exemption be a manufacturing corporation, but that it must carry on its actual manufacturing operations ” within the State.

Thus, upon reason and authority, we conclude that the relator is not within the exemption provided by section 3. It carried on no manufacturing operations whatever within the State.

The remaining question to be considered is whether the Comptroller erred in fixing the amount of the relator’s capital stock employed within this State.

It appears that a portion of the property for which the capital stock was issued was “ stock wrought and in process, raw materials,” at the shops in Blackinton. As fast as such were made into goods it was sent to New York city and held by the company until sold. When sold the proceeds went into its bank account or were expended for other material which in its turn was worked into goods and shipped to the company’s custody in New York. We have no doubt that under such circumstances the manufactured goods and the company’s bank account in New York city represented its capital sto.ck employed within this State. (People ex rel. S. C. Oil Co. v. Wemple, 131 N. Y. 64; People ex rel. Edison Electric L. Co. v. Campbell, 138 id. 543; People ex rel. A. C. & D. Co. v. Wemple, 60 Hun, 225; 129 N. Y. 558.) And there being nothing in- the ease to• indicate that the valuation fixed by .the Comptroller was excessive, we see no reason for interfering with the decision. (People ex rel. Western El. Co. v. Campbell, 80 Hun, 466.)

The decision of the Comptroller, therefore, must be sustained.

All concurred.

The determination of the Comptroller confirmed, with fifty dollars costs and disbursements.  