
    The People of the State of New York ex rel. Eppens, Smith & Wieman Company, Relator, v. James A. Roberts, as Comptroller of the State of New York, Respondent.
    
      Corporate tax—the Comptroller on a revision cannot increase it—ca/pital -used in foreign commerce is not to he deducted.
    
    Chapter 463 of the Laws of 1889, amending chapter 542 of the Laws of 1880, authorizing the Comptroller of the State of New York to revise and readjust, any account for taxes levied under the-act of 1880, “ whenever it shall be made to appear by evidence submitted to him that the same has been illegally paid or so made as to include taxes which could not have been lawfully demanded, and shall resettle the same according to law and the facts, and charge or credit, as tike case may require, the difference, if any, resulting from such revision and resettlement upon the current accounts of such person, association, corporation or joint stock company,” does not empower the Comptroller, if upon the readjustment the original, assessment shall appear to have been too small to increase such original assessment.'
    
      It seems, that a foreign corporation, taxable, under chapter 542 of the Laws of 1880, upon the capital employed by it in the State of New York, is not entitled to deduct therefrom such amount as is employed by it in foreign commerce.
    " Cebtiobabi issued out of the Supreme Court and attested on the 8th day of July, 1897, 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 his proceedings had in imposing a tax upon the capital stock of the relator for the years 1891, 1893, 1894 arid 1895, and in revising and readjusting the same.
    
      Edmund L. Cole and John B. Green, for the relator.
    
      John C. Davies, Attorney-General, for the respondent.
   Per Curiam :

This relator seeks to review the revision by the Comptroller of the account for taxes which he had audited arid stated against such relator for the years 1891, 1893, 1894 and 1895, under the provisions of chapter 542 of the Laws of 1880 and the amendments thereto. The relator is a foreign corporation, organized under the laws of the State of Rew Jersey, with a capital stock of $1,000,000. Its business is the importing and selling of tea, coffee and spices, and its only place of business is in the city of Rew York.

The Comptroller had settled the account for taxes for the year-ending Rovember 1, 1891, upon the basis that its capital stock employed within this State was $200,000 ; and for the taxes accruing in the years 1893, 1894 and 1895- upon the basis that its capital stock employed in this State in each of such years was $250,000. The rate at which the tax was assessed for the year 1891 was one and one-half mills. In 1893 it was two and three-eighths mills. In 1894 it was one and three-fourths mills. And in 1895 it was one and one-half mills.

The amount of the tax' so charged against the relator for the year 1891 was $300; for the year 1893, $593.55; for the year 1894, $437.50 ; and for the year 1895, $375. Such tax for 1891 was paid April 9, 1892. The one for 1893 was paid January 8, 1894,- and that for 1894 was paid January 16, 1895.

• On March 31, 1896, the relator filed a petitiori with the Comptroller, asking that such accounts for the aforesaid years be revised and readjusted. And in such proceeding, on July 10,1896, a hearing was had which finally resulted in a determination ol the Comptroller, rendered on June 7, 1897, whereby the account for the taxes of such years was revised and readjusted as follows: For the years 1891 and 1895 the tax was fixed at $2,000, based up>on the conclusion that the capital stock employed in this State was $1,000,000 ; and the rate adopted was two' mills. For the year 1893 the -tax was fixed at $2,3.75, upon the theory that the amount of capital stock employed in this State was $1,000,000.;. and the rate, was fixéd at two and three-eighths mills. For the year 1894 the amount of tax was fixed at $1,750; the amount of capital stock so-employed was fixed at $1,000,000, and the rate adopted was one and. three-fourths mills.

In the year 1895 the Comptroller also assessed against the relator a license tax, under the provisions of chapter 240, Laws of 1895, amounting to $312.50, based upon the determination that the value of the capital stock employed in the State was $250,000, and at the rate of one and one-fourth mills. Upon such readjustment such tax was increased to $1,250, upon the theory that the capital stock so employed- within the State was $1,000,000.

By chapter 463 of the Laws of 1889, amending the. act of 1880, it is provided that the Comptroller may at any time revise and readjust any account theretofore settled agaiilst any person, association, corporation, etc., by himself or any preceding Comptroller, for taxes arising undei* the .act of -1880) and its amendments, “whenever it shall be made to appear by evidence submitted to him that the same has been illegally paid or so made as to include taxes which could not have been lawfully demanded, and shall resettle the same according to law and the facts, and charge or credit as the- case may requiré the difference, if any, resulting from such revision- and resettlement upon the current accounts of such person, association, corporation or joint-stock company,” Such.statute remained in force until th¿. passage of chapter 90.8 of .the Laws of 1896, which took effect June 15,1896, when it was repealed, and section .195 of the latter act was evidently intended to take its place. By this later section it is provided that the application for a readjustment must be made within á year, and some other changes are made in the phraseology which render.it doubtful whether any other or further change was intended.. That, however, need not now be determined inasmuch as .the petition for this readjustment was filed-some..time before the passage of the act of 1896, and the proceedings thereunder are, .therefore, to be controlled' by the -law of 1889, above referred to. (See § 31) Statutory Construction. Apt,. Laws of 1892, .cliap. 677.)- ■

It is now claimed by -the relator that in readjusting an assessment, under the provisions of such act of 1889, the Comptroller had no authority to increase the amount of the tax as originally fixed by him.

This position we are of the opinion is well taken.

It is to be noticed that he is given authority to readjust his account whenever it is made to appear that such account includes taxes which could not have been lawfully demanded, or, in the event that they have been paid, that they have been illegally paid or exacted. His right to interfere with his account seems to depend entirely upon the establishment. of these facts. If the party complaining shall ’fail to convince him that such unlawful.taxes have been either paid or included within the account, then the condition does not exist under which he may revise or readjust it, and the account must stand as already fixed.' The scheme of the statute seems to be to give to the party assessed an opportunity to produce to the Comptroller evidence, and to be heard upon the questions which are presented by the account as it has been settled and assessed against him. He, then, for the first time, has the opportunity to show to the Comptroller that the account is unlawful, and this review seems to have been authorized to give him such an opportunity. The statute does not suggest that the Comptroller may call the party taxed before him, to the end'that a new and larger assessment may be made, but it distinctly provides that it is only when illegal taxes have been included in the account that the revision may be made. The charge that they are illegal, that the account contains toó much, in short, that the taxes are already too large, must be made to appear as the condition of a readjustment; and hence we think that when the party taxed fails to establish that fact, the Comptroller may do no more than deny the application to readjust. He has no authority to go further and levy a new and larger tax.

It is claimed that the phrase, he shall “ charge or credit,” as the case may require, the difference, etc., indicates that he may increase the amount of the tax. But such phrase evidently applies to the state of the account as it shall then exist between the State and the party taxed. If he has paid the illegal tax, the overpavnient shall be credited on his account with the State — nothing is repaid to him. If he shall not have then paid the original tax “ the difference”— that is, the diminished amount, if it is diminished — shall be charged against him. The meaning of this provision simply is,' that in the event that the tax is readjusted the account shall be altered to correspond to the resettlement.

The statute is so explicit with reference to the conditions under which the Comptroller may readjust the tax, that we cannot give to such phrase the extended meaning that the defendant claims for it.

We conclude, therefore, that the Comptroller was in error in increasing the taxes beyond the amount which he had already assessed against the relator.

The question remains whether he should have reduced them. A reduction was asked on the ground that so much of the relator’s capital as was employed in foreign commerce was not liable to any taxation whatever. The case of People ex rel. Klipstein & Co. v. Roberts (36 App. Div. 597) is an authority against such a claim.

It was further claimed that, by the original assessments, the amount of capital employed within this State was fixed at too large an amount, because the indebtedness of the relator properly chargeable against the same was not deducted. The facts as they appear upon the rehearing do not sustain that position.

From this view of the case, it results that the Comptroller should ■have refused the’ application to readjust the account, and should have left it to stand against the relator as originally fixed.

Determination of the Comptroller reversed, with fifty dollars costs and disbursements.

. All concurred.

Determination of the Comptroller reversed so far as it increases the assessment originally made by him, and the original assessment confirmed, with fifty dollars costs and disbursements to the relator.  