
    The People of the State of New York ex rel. S. Cohn & Co., a Corporation, Relator, v. Nathan L. Miller, as Comptroller of the State of New York, Respondent.
    • Taxation of corporations—merchandise in the hands of selling agents outside the' State—proof required in respect thereto — a liability to redeem the preferred stock at a date specified not considered in reduction of the tax — where the corporation was in existence but part of the year a proportionate tax is assessed.
    
    
      Semble, that that part .of the capital stock of a New York corporation, represented by merchandise temporarily in the hands of selling agents outside .of that State; which is not sold and eventually comes back to the State of- New York, is taxable.
    If a corporation desires' to escape assessment for taxation by the State Comptroller for that part of such merchandise which does not come back to the State of New York it should give proof as to what part of the entire merchandise that portion is.
    Where the corporation is capitalized at $150,000, $50,000 of which is in common stock and the other $100,000 of which is preferred stock drawing six per cent accumulated dividends and the par value of which is to be repaid in 1913, the par value of the preferred stock is not a liability which may be deducted from the assets of the corporation in determining the amount of capital subject to taxation.
    Where the corporation was organized during the year for which the tax was levied the tax should be assessed for only that portion of the year during which the corporation was in existence and doing business.
    
      Certiorari issued out of the Supreme Court ánd attested on the 21st day of October, 1903, directed to Hath an L. Miller, as Comp-, troller of the State of Hew York, commanding him to certify and return to the office of the clerk of the county of Albany all and singular liis proceedings had in relation to an assessment against the relator for the year 1902.
    
      Eugene G. Kremer, for the relator.
    
      William II. Wood and John Cwmeen, Attorney-General, for the respondent.
   Smith, J.:

The relator is a domestic' corporation, not having declared a dividend prior to the statement of the tax by the Comptroller. Under section 182 of the Tax Law (Laws of 1896, chap. 908, as amd. by Laws of 1901, chap. 558), therefore, the relator must be assessed at the rate of one and one-half mills upon each dollar of the appraised capital employed within the State. It appears that four months prior to this statement of the tax capital stock had been issued for $150,000, which sum was received therefor by the corporation/ The. president of the corporation swore that he knew of no losses that had been incurred by the corporation within that time: The Comptrollertherefore, rightfully held the assets of the corporation to be of that amount at the time of the statement of the tax.

In the petition for the rehearing the relator states that at all. times there was of the capital stock of the corporation outside of the State of Hew York the amount of $25,000. Upon the hearing the president testified that there was an average at all times of stock without the State of Hew York to the amount of $75,000. Some of that stock is without the State of Hew York upon memorandum, so called, that is, it is left with dealers to sell, and,, if not sold, it is returned to the relator. The balance of the stock outside of the State of Hew York is given to agents to sell in different parts of the country, and while probably the major part of the stock is sold, still, if any of it be not sold, it naturally finds its. way back to the State of Hew York. That part.of the stock which is temporarily placed without the State for sale, which eventually finds its way back to the State of Hew York, is probably taxable within the case of People ex rel. N. Y. C. & H. R. R. R. Co. v. Knight (173 N. Y. 255). Of the average amount of stock, as testified to as without the. State of New York, it does not appear how much thereof was without the State of New York which was never returned thereto. If the court should be of opinion, therefore, that such average amount as was not returned to the State was not capital employed within the State so as to be subject to taxation, the relator has not furnished any basis upon which that amount could be computed, and the. Comptroller was* therefore, right in refusing to déduct from the sum of $150,000 any part of the amount claimed as without the State.

The relator further claims that there should be deducted from the gross amount of the assets the sum of $100,000 as a liability for capital stock. The company was capitalized at $150,000, of which $100,000 was made preferred stock, receiving six per cent accumulating dividends, and no more. The par value of this stock was to be repaid in 1912. The other $50,000 was common stock. It is claimed that inasmuch as this $100*000 was to be paid absolutely at a date fixed, it is a liability which may be deducted from the assets in determining the amount of capital subject to taxation. While this corporation might have made this a liability which coiild be deducted from the sum of the assets in determining the tax,- it has chosen to make it capital stock and so denominated it. If $100,000. of the $150,000 in capital stock could thus escape taxation by reason of an obligation to return the same at a given time, I cannot see why the full $150,000 may not be made a liability in the- same way and thus escape taxation. Whether or not tins be deemed a legal liability of the corporation, a liability to repay contributors to capital stock is not, in my judgment, such a liability as the law contemplates should be deducted from the assets.of the corporation in order to ascertain the ultimate amount subject to taxation.

We have held, however, where acorporation was not organized until within the year prior to the statement of the tax that the tax-should be assessed for only a proportionate part of the time' during which the corporation has been in existence and doing business. (See People ex rel. Fort George R. Co., v. Miller, 90 App. Div. 588; People ex rel. Rees' Sons v. Miller, id. 591; 86 N. Y. Supp. 193.) On October 31, 19.02, this corporation had been doing business for about four months. The tax which should have been properly assessed, therefore, should be one-third of one and one-half mills upon $150,000.

All concurred.

Determination of the Comptroller modified as stated in opinion, and as so modified confirmed, without costs to either party.  