
    The People of the State of New York ex rel. New York Mail and Newspaper Transportation Company, Relator, v. Charles H. Gaus, Comptroller of the State of New York, Respondent.
    Third Department,
    November 10, 1909.
    Tax—franchise tax — section 182, Tax Law, construed — when assessment based on par value of stock.
    Since sections 183 and 190 of the Tax Law were amended by chapter 734 of the Laws of 1907 the franchise tax of a corporation doing business only in this State should be computed upon the par value of its stock if it has paid no dividends and its assets do not exceed its liabilities, exclusive of capital stock.
    An actual appraisal of the stock is necessary only where the financial status of the corporation brings it within section 190 of the Tax Law.
    A franchise tax is payable in advance, and is to be determined by the financial status of the corporation for the year preceding the thirty-first day of October.
    
      Certiorari issued out of the Supreme Court and attested on the 13th day of February, 1909, directed to Charles H. Gaus, Comptroller of the State of New York, directing him to certify and return to the office of the clerk of the county of Albany all and singular his proceedings had in regard to determining the franchise tax to be paid by the relator for the years 1907 and 1908.
    
      Arthur O. Townsend [Franh H. Vedder with him on the brief], for the relator.
    
      Edwrnd R. O'Malley, Attorney-General [Franklin Kennedy, Deputy Attorney-General, of counsel], for the respondent.
   Kellogg, J.:

The relator is a domestic corporation carrying on business in this State only. It paid no dividends, and its assets do not exceed its liabilities exclusive of its capital stock. The Comptroller, by the determination under review, has stated a tax against it of three-fourths of one mill upon the par value of its capital stock.

Before the amendment in 1906 of section 182 of the Tax Law, the franchise tax against such a corporation was based upon the appraised value of its capital stock and not upon the par value thereof. (People ex rel. N. Y. & E. R. F. Co. v. Roberts, 168 N. Y. 14.) In that case, decided in' 1901, the Court of Appeals determined that section 182 standing alone was ambiguous, and perhaps justified the contention that the par value of the stock was the correct basis for the tax, but that section 190, providing for the appraisal in all cases where a dividend of six per cent was not declared, made it clear that the tax of such corporations could only be based upon the appraised value.

Chapter 474 of the Laws of 1906 amended section 182, and its language, after the amendment, indicates that the par value of the stock is to be the basis upon which the tax is to be computed. The amendment of section 190 at the same time permits an appraisal only where a dividend of six per cent was not declared, and the assets exceeded the liabilities, including the capital stock, or the average price at which the stock sold during the year is equal to or greater than par, and required that the appraisal must not he less than par. This amendment following the Roberts case was evidently intended to make the par value of the capital stock the minimum basis for taxation, and, therefore, no appraisal was provided for in cases where the stock was worth less than par.

Chapter 734 of the Laws of 1907 amended section 182 by incorporating therein substantially the same provision contained in section 182, as amended by the act of 1906, and also provided that in cases not within any of the preceding paragraphs of that section, the actual value of the capital stock shall be the basis upon which the tax may be computed. Section 190 of the Tax Law was amended at the same time, practically restoring the provisions of the law as it existed prior to 1906 with reference to an appraisal if a dividend of six per cent or more had not been declared, and permitted the Comptroller, if not satisfied with the valuation so made and returned, to make a valuation thereof and settle the account upon the valuation so made by him.

It is urged that this amendment restores the rule established in the Roberts case, and makes the actual value the basis of taxation in all cases where a dividend of six per cent or more has not been declared. The law of 1907 provides three cases where it is necessary to have an actual appraisal of the value of the stock: (1) Where a dividend of six per cent or more was not declared and the .assets exceed the liabilities including capital stock; (2) where a dividend of six per cent or more was not declared, and the average price at which such stock sold during the year was equal to or greater than its par value, in each of which cases the valuation cannot be less than (a) the par value of the stock, (b) the difference between the assets and liabilities exclusive of capital stock, (c) the average price at which such stock was sold during the year; (3) corporations not taxable under any of the other subdivisions.

We, therefore, see that the appraisal mentioned by section 190 of the amended law is necessary in many cases, and it is very proper in every case where the dividend is not six per cent or greater that the Comptroller have before him as a part of the report all the facts which may bring the case within any paragraph of the section, so that he may better determine under which paragraph it properly falls. Sections 190 and 182 are not, therefore, antagonistic, but may be harmonized and read together. Section 190 does not destroy the plain provisions of section 182 where the par value of the stock is made the basis for computation. The relator falls clearly within the provisions of section 182 which make the par value of the stock the basis upon which the tax is to be computed.

The appellant contends that during part of the year 1906 its business was necessarily suspended, and that under People ex rel. Mutual Trust Co. v. Miller (177 N. Y. 51) a tax should not be imposed upon it for the entire year. The amendment of section 182 in 1906 imposing a franchise tax upon corporations required that the tax be paid annually in advance. The Comptroller has erroneously stated that the tax under review was for the two years ending October 31, 1907. The Comptroller stated this tax January 31, 1908, as due and payable on January 15, 1907, for the year ending October 31, 1906, and on January 15, 1908, for the year ending October 31, 1907. As the tax is payable in advance, no tax was stated against the relator for the year 1906, but the statements under the law were actually for the years 1907 and 1908. The status of the corporation on the thirty-first of October for each preceding year is made the basis upon which the tax to be paid in advance for the succeeding year is to be based. The business of the preceding year is, therefore, only important as giving the measure by which the tax for the following year may be computed. No question is raised but the relator was continuously in business during both the years for which the tax is payable.

The determination of the Comptroller should be modified so that it will appear that the tax is for the two years ending October 31, 1908, and as so modified confirmed, with fifty dollars costs to be paid by the relator.

All concurred.

Determination of the Comptroller modified so that it will provide that the tax is for the two years ending October 31, 1908, and as so modified confirmed, with fifty dollars costs and disbursements to be paid by the relator.  