
    The People of the State of New York ex rel. Hawley Box and Lumber Company, Appellant, v. Edward P. Barker and Others, as Commissioners of Taxes and Assessments of the City of New York, Respondents.
    
      Taxation — dividends declared, but retained in the business of the corporation, are taxable.
    
    The mere formal declaration of dividends by a corporation, where there is no intention that they shall be paid over to the stockholders and no change is made in the actual status of the invested funds of the corporation used in the transaction of its business, does not operate to remove such moneys from the category of corporate assets or from liability to taxation.
    Appeal by the relator; the Hawley Box and Lumber Company, from a judgment of the Supreme Court in favor of the defendants, entered in the office of the clerk of the county of. Hew York on the 10th day of March, 1897, upon an order of the Supreme Court, made at the Hew York Special Term and entered in the office of the clerk of the county of Hew York on the 10th day of March, 1897, dismissing a writ of certiorari granted to review the proceedings of the defendants.
    
      J. B. Oreen, for the appellant.
    
      Jas. M. Wd/rd, for the respondents.
   Patterson, J.:

In addition to the question disposed of in the Yellow Pine Company Case (ante, p. 524), this case brings up for review the action of the commissioners of taxes and assessments in including among the assets of the relator, liable to taxation, an item returned by the relator itself as dividends declared but unpaid, money used in the business of the corporation. Undoubtedly dividends declared and credited to stockholders become debts and obligations of the company to the stockholders, and are the property of the stockholders and not of the corporation, but the subject is presented in this case in a peculiar way. There were only four stockholders, of this corporation. These dividends were declared several years prior to 1896, and never were called for, but were left in the business and were used in that business, evidently with the assent of the stockholders. There was, therefore, nothing but a mere formal declaration of dividends, and the secretary and treasurer of the company testified before the commissioners that when the company declared its dividends it did not take the money out, but left it in the business, and that it is' included in the items which have been enumerated in the gross assets of the business. Mere formal action, such as declaring the dividends, without any intention to pay them over to the stockholders, and without any change in the actual status of the invested funds of the corporation used in the transaction of its business, cannot accomplish anything. It would seem to be apparent that these moneys were just as much in substance and in fact property of the corporation, invested in its business, as if there had been no change whatever attempted. Merely calling them dividends, and nothing more, does not remove them from the category of assets. The money has remained in the business, subject to its risks, and forming part of the capital employed in it by the assent of the stockholders.

We think the commissioners were right in including the amount among the taxable assets of the relator, and the order appealed .from is affirmed, with costs.

Van Beünt. P. J., Bumsey and O’Brien, JJ., concurred.

Order affirmed, with costs.  