
    The People of the State of New York ex rel. International Elevating Company, Relator, v. James A. Roberts, as Comptroller of the State of New York, Respondent.
    Third Department,
    November 14, 1906.
    Tax — franchise tax — interstate commerce — when foreign corporation Operating in New York bay does business here — investment of surplus earnings hot considered in assessing the tax.
    
      II seems, that although a foreign corporation doing business in this-State is engaged in interstate commerce, it is- nevertheless subject to; a franchise tax, and -the value of its franchise may he computed upon its gross earnings in this State.
    
      But a corporation operating floating elevators in New York bay for'hire and at times renting the use of them in New Jersey waters and at other times in New York waters is engaged in business in this State when operating its elevators . here irrespective of any question of interstate commerce, and is subject to a franchise tax to be computed upon the capital employed within the State.
    But in determining the amount of capital used in the State, government bonds representing an investment of surplus earnings to be used in time of need should not he considered.
    Oeetiorabi issued out of the Supreme Court and attested on the 26th day of .April, 1898, directed to James A. Boberts, as.Comptroller of the State of ¡New York, commanding. . im to certify and return to the office of the clerk of the county of Albany all and singular his proceedings had relative to the tax imposed upon the relator for the year ending ¡November 1, 1896.
    This is a certiorari to review the determination of the Comptroller assessing the franchise tax against the relator at $973.68 in the year 1896. The relator is incorporated under the laws of ¡New Jersey, and has there a formal office for the election of officers and the performance of such business as is necessary to be performed in tlxat State in order to comply with the laws of its incorporation. Its business and business offices are conducted in and from the city of ¡New Yox-k. It operates tlxii’teen floating elevatoi's, used xipon the waters of ¡New York bay to elevate grain from canal boats or trains into the ocean-going steamers for shipment abroad. Its work is done upon the waters of the bay, partly within the State of ¡New Jex’sey and partly within the State of ¡New Yox-k. It also owns two barges in said waters which are used by it for hire to such persons as may desire to use them and for such purposes as they require in either State. Some of the elevatoi's move from place to. place as required, by their own motive power, and others are towed by another boat having power. The Comptroller determined the total number of days in which the elevators worked and then ascertained the number of days they woi’ked within the State of ¡New York, and by compax-ing these figures determined the proportionate amount of its capital as represexxted' by the value of. the boats employed within this State, to which he added the bank balance in ¡New York, $70,178; United States bonds, $100,000; office furniture, $500, which, with the value of the boats employed in ¡New York, $385,712, made $556,390, the total capital found to be -employed within the State of New York, and upon that basis- the tax was determined. The relator contends that the company is not taxable at all because it is engaged in the business -of foreign and. interstate commerce, and any such taxation under the State law is an attempt to regulate foreign or interstate commerce, and that the $100,000 invested in United States bonds .is surplus earnings and no part of its capital, and, therefore, not taxable. •
    
      Dykman & Carr [A. Dudley Britton of counsel], for the relator.
    
      Julius M. Mayer, Attorney-General [Horace McGuire, Deputy Attorney-General of counsel], for the respondent.
   Kellogg, J.:

The franchise tax imposed under section 182 of the Tax Law (Laws of 1896, chap. 908) is not a tax upon the earnings or property of the corporation, but in the case of either a foreign or a domestic corporation is upon the “ mere intangible right to exercise a franchise.” (People ex rel. United States Aluminum P. P. Co. v. Knight, 174 N. Y. 475, 485.) In that case such a tax against a foreign corporation, computed upon the value of letters patent issued by the United States government, was sustained, the court laying down -the’ rule that the value of property exempt under the laws of the United States may be used as a basis for computing the amount of the tax, referring to ’the fact that while the United States government is not taxable by a State, a transfer tax may be computed and collected on account of a legacy to it, for the-reason that the -tax is not upon the legacy, but the right of succession. In People ex rel. Pennsylvania R. R. Co. v. Knight (171 N. Y. 354) the question was not decided, 'but it is evident that the court'was of the opinion that a franchise tax under this section of the statute might be computed upon the gross earnings of a foreign corporation from interstate commerce. In People ex rel. Hatch v. Reardon (184 N. Y. 431) the unanimous opinion of the Court of Appeals seems to tend in the same direotian. Therefore, even if the business of the relator was interstate or foreign commerce, that furnishes no valid objection to this tax.

But it is unnecessary to determine whether the -floating elevators were engaged in foreign or interstate commerce, or in a domestic business, for the.reason that -the use by the relator of the two barges in the State of New York was clearly a domestic business within the State and made it liable for this tax under the language and spirit of the Tax Law. The amount of the tax does not depend upon the precise length of time for which the corporation carries on business, or upon the amount of business done. ' If relator chooses to engage in such business it becomes liable for the tax, to be computed upon its capital engaged within the State, even though the amount of business is very small. ■ When the relator is shown to he taxable, then the amount of the tax is solely for the Legislature to determine, and it may tax a gross sum or provide that the tax may be computed upon such basis as it may direct. (People ex rel. United States Aluminum P. P. Co. v. Knight, supra; People ex rel. Travelers' Ins. Co. v. Kelsey, 116 App.. Div. 910, decided at this term of court.)

The relator, therefore, has no just cause of complaint'against the determination of the Comptroller, except that it appears that in determining the amount of capital within the State he included the amount of $100,000 of government bonds which was not capital employed within the State but was an investment of surplus earnings of the company which had been accumulated in good years to.be used if necessary in lean years. These surplus earnings should not have been considered in determining the amount of the tax. (People ex rel. Singer Mfg. Co. v. Wemple, 150 N. Y. 46; People ex rel. United Verde Copper Co. v. Roberts, 156 id. 585.)

The determination of the Comptroller, therefore, should be modified by deducting therefrom the amount of-$115.03, the amount of tax computed against-such surplus earnings, and as thus modified is confirmed, without costs.

All concurred ; Cochrane, J., in result; Parker, P. J., not sitting.

Determination of the Comptroller modified as per opinion, and as modified confirmed, without costs.  