
    The People of the State of New York ex rel. The Trust and Deposit Company of Onondaga, Respondent, v. Clark H. Norton and Others, Assessors of the City of Syracuse, Appellants.
    
      Tax assessment on trust and safe deposit companies — deductions, how made—“ capital stock ” defined.
    
    In levying an assessment pursuant to section 13 of the Tax Law (Laws of 1896, chap. 908) upon the personal property of a trust and safe deposit company, incorporated under chapter 874 of the Laws of 1866, hut granted, by chapter 75 of the Laws of 1899, all the powers conferred by chapter 689 of the Laws of 18.93 upon trust and safe deposit companies, there should be deducted from the amount of the gross assets of the company all debts owing by it, including the amount owing to its depositors, and from the balance there should be deducted that part of its capital invested in United States bonds, the stock of other corporations taxable upon their capital stock, and ten per cent of its capital stock.
    The phrase ‘‘ capital stock,” as used in the Tax Law, means not the stock held by the stockholders, but the capital owned by the corporation and paid in and used as the basis of the business enterprise.
    Appeal .by the defendants, Clark H. Norton and others, assessors of the city of Syracuse, from a judgment of the Supreme Court in favor of the relator, entered in the office of the clerk of the county of Onondaga on the 6th day of March, 1900, upon an order confirming the report of a referee.
    The proceeding was instituted by a writ of certiorari to review an assessment upon the personal property of the relator.
    
      Melvin Z. Haven and James E. Newell, for the appellants.
    Hiscoelt, Doheny, Williams c& Oowie, for the respondent.
   Williams, J.:

The judgment vacated and set aside an assessment of the relator for personal property in the year of 1899 in the sum of $244,684. It appears from the report of the referee that the relator was incorporated by a special act of the Legislature of the State of New York (Chap. 874, Laws of 1866), and by chapter 75 of the Laws of 1899 was granted all the powers conferred upon trust and safe deposit companies incorporated under chapter 689 of the Laws of 1892, and the acts amendatory thereof, as fully as if incorporated thereunder; that its capital stock, paid in at the time it was incorporated, was $100,000; that the assessment was made as of July 1, 1899, and at that time the total assets of the relator were of the actual value of $3,392,799.82, and its liabilities were $3,099,237.11, the excess, of assets over liabilities being .$293,562.71; that among the assets were United States bonds of the actual value of $286,437.50; stocks of other corporations which. were assessed'on their stock, $12,072.50; ánd ten per ceiit of the' capital''stock of relator was $10,000, making a total of $308.510.

These facts were undisputed. The referee decided, as matter of law, that in order to arrive at the amount of taxable assets of the relator there should be deducted from its net assets the amount of United States bonds, stocks of other corporations which were assessed on their stock, and ten per cent of the capital stock of the relator, and these deductions being made, the relator had no personal property for which it could be assessed. The defendants claim that this manner of arriving at the amount of taxable assets was incorrect; that the whole of the net assets should not have been regarded as invested in non-assessable securities, but largely in securities that were not exempt from taxation ; that the indebtedness to depositors should not have been deducted in order to arrive at the amount of assessable assets, because such deposits were used in the purchase of the United States bonds.

Section 12 of chapter 908 of the Laws of 1896 (The Tax Law) provides as to the assessment of corporations of the character of the relator: “ The capital stock of every company liable to taxation, except such part of it as shall have been excepted in the assessment roll or shall be exempt by law, together with its surplus profits or reserve funds, exceeding ten per centum of its capital, after deducting the assessed value of its real estate, and all shares of stock in other corporations, actually owned by such company, which are taxable upon their capital stock under the laws of this state, shall be assessed at its actual value.”

This section is somewhat involved, but in general terms it makes the capital stock and surplus profits after allowing the exemptions assessable at their full values. The phrase “ capital stock,” as used in the statute, means not the stock held by the stockholders, but the capital owned by the corporation and paid in and used as a basis of the business enterprise. (People ex rel. U. T. Co. v. Coleman, 126 N. Y. 434.)

It was proper in this case in arriving at the real value of the capital stock and surplus to deduct from the amount of the gross assets all the debts owing by the relator, including the amount owing to depositors. (People ex rel. Bridgeport Sav. Bank v. Barker, 154 N. Y. 128.) And it was proper to allow, as an exemption against the real value of such capital and surplus, the amount invested in United States bonds and in stocks otherwise taxable.

In the case last above cited the court said, in deciding a like question : “ The individual citizen is allowed to deduct from the value of his personal property his debts and such stocks as are otherwise taxable and such other property as is exempt by law from taxation.

In the case of the individual, the amount invested in United States bonds would be deducted if held in good faith. It is urged in the case at bar by the commissioners that if the amount due depositors is deducted from the gross assets, as a liability, it must have included the United States bonds owned by the relator, as they were doubtless purchased with money received on deposit, .and that to deduct the amount again would be to deduct $220,000 of the deposits twice. We do not think this reasoning is sound. In ascertaining its apparent surplus, the relator is entitled to deduct the amount due depositors as a liability, and from that apparent surplus are to be deducted all the allowances accorded the private citizen in the assessment of his personal property.

“If the relator elects in good faith to invest its apparent surplus in securities that are not taxable under the laws of this state, the assessing officer is bound by the statute to recognize its right to do so. This rule of assessment has been repeatedly followed in this state. (People ex rel. Savings Bank of New London v. Coleman, 135 N. Y. 231.)”

This case arose under section 312, chapter 409 of the Laws of 1882, but the same rule applies to the Tax Law.

The same rule was applied in People ex rel. Seidenberg Co. v. Feitner (41 App. Div. 571, 573 [1st dept.]), where it was said: “For the purpose of fixing the amount at which the relator should be assessed, we must start with this excess of assets over liabilities and deduct therefrom the ten per cent on the capital stock allowed by statute * * * and * * * the value of the government bonds.”

It cannot be claimed that the relator had any purpose of evading taxation in investing its capital or surplus in United States bonds, or other non-taxable securities, so as to be deprived of the right to deduction thereof under section 0 of the Tax Law.

We conclude, therefore, that the decision of the Special Term was correct, and that the judgment appealed from should be affirmed, with costs.

All concurred.

Judgment affirmed, with costs.  