
    The People ex rel. The Keystone Gas Co., Resp’ts, v. The Assessors of Olean et al., App’lts.
    
      (Supreme Court, General Term, Fifth Department,
    
    
      Filed April 14, 1888.)
    
    1. Assessments—What is not real property—Laws 1881, chapter 393.
    
      Held, That in assessing a corporation’s real estate, under Laws 1881, chapter 393, it was error on the part of the assessors to consider the value "of its franchise, and its contract under which it carries on business.
    3. Same—Real estate—Laws 1855, chapter 37, furnishes no rule for VALUATION.
    
      Held, That Laws 1885, chapter 37, had application in the taxation of stock of corporations, and furnished no rule for determining the value of its real estate for assessment.
    Appeal from a judgment on certiorari to review an assessment, entered on the report of a referee.
    
      Fred L. Eaton, for app’lts; Carey & Rumsey, for resp’ts.
   Dwight, J.

—The relator is a foreign corporation, doing business in the village of Clean in this state. Its property within this state consists of mains, pipes and tanks, for the reception and distribution of natural gas, laid or located within the corporate limits of the village of Clean—all, by definition of the statute, real estate (Laws of 1881, chap. 293)—and an inconsiderable amount of personal property.

The valuation of the assessors was $100,000; that of the referee $85,000.

The business of the relator in Olean is the sale and distribution to consumers, of natural gas for fuel and light. It produces no gas of its own, but under a contract with the National Transit Company, receives its supply of gas from the pipe line of the latter company, into its own mains at the village limits. Its system of piping is under a grant from the village corporation, laid beneath or upon the streets of the village.

In support of their valuation, the assessors say by their return that “the property rights and interests” of the relator are of the value of $100,000. That they have “the exclusive privilege ” from the authorities of the village to lay such mains, etc., “ and the right to tear up, dig and encumber the streets with their operations;” “that the income from the said plant, lines, etc.,” is very large, amounting to about $80,000 annually; and “that said plant, with its rights and privileges, is very valuable.” The return also states the terms of the contract of the relator with the National Transit Company; the number of its customers; the amount of its share of the gross receipts, and the amount of its “running expenses.”

From these statements of the return it is not difficult to infer the method adopted by the assessors in arriving at the valuation in question. It is quite clear that that method involved some estimate of the value of the relator’s franchise or grant from the village; of its contract with the National Transit Company; and of its income and the profits of its business resulting from that contract, if not as parts of its property at least as elements of the value of that property; and herein lies the vice of the method.

The property assessed—the system of mains, tanks and service pipes, as well as the small lot on which the tanks stand—is real estate, and to be assessed as such. Laws of 1881 (supra). As the real estate of a corporation (whether domestic or foreign) it is to be assessed as that of individuals. 1 R. S., 390, § 6. “At its full and true value as they (the assessors) would appraise the same in payment of a just debt due from a solvent debtor.” Id., 393, § 17.

Its “rights and privileges” granted by the village of Olean are not taxable. They constitute a franchise which is in no case the subject of taxation except by special statute. Smith v. The Mayor, 68 N. Y., 555; People ex rel. N. Y. El. R. R. v. Commissioners, 82 id., 459; S. C., 19 Hun, 464. It is true these rights and privileges constitute a condition of the existence of the relators plant; but it must be considered that the municipality has received compensation therefor in the consideration for the grant, and the grantee is not subject to the further reaction, at the hands of the municipahty, by way of taxation upon the grant itself. See case last above cited.

It was also clearly inádmissible to estimate the value of the contract of the relator with the company, from which it received its supply of gas, and the profits resulting therefrom, in fixing the valuation of its real estate. There is no difference between the case of a corporation selling and delivering gas for fuel and light, and that of a corporation or individual selling and delivering coal and oil for the same purposes." The owner of a coal yard in Olean, obtains his supply of coal from a mining and transportation company in Pennsylvania. Whether the contract for such supply is favorable or unfavorable, and his business, consequently, profitable or otherwise, cannot affect the value of his coal yard and sheds for the purposes of assessment and taxation. That real estate must be assessed at its “full and true value,” dependent upon the extent and character of the land and structures, and their location, fitness and general eligibility for the purpose for which they are used; the assessors have no jurisdiction to enquire the price at which the dealer buys his coal, nor the excess of his receipts over his “running expenses.”

In the case of a corporation all these and other similar elements are likely to affect the value of its capital stock, and thus to become, indirectly, the subjects of taxation at the place where the capital stock is taxable. They can have no consideration in determining the value of its real estate.

It is true the case of a plant, such as that in question is sui generis; there probably are, in the village of Olean, no standards of comparion for property of this character; no sales of similar property to establish a market value; it may be difficult to formulate a satisfactory rule for the particular case; but the difficulty of the case does not afford dispensation from the general rules of law applicable to the assessment of real estate, nor justify the adoption of methods clearly in contravention of such general rules.

On the other hand the rule apparently adopted by the referee in determining the value of this property, and contended for by counsel for the relator in support of this judgment, cannot be approved. That rule seems to have been derived from the statute of 1855 (Laws of 1855, chap. 37), and to have limited the valuation of the property in question, to the amount of money actually invested therein. The findings state the value of the property at $85,000; but it appears from the opinion of the referee‘that this valuation was “based upon the cost of furnishing and laying the gas mains and pipes, considered as an investment,” etc; and what is of more importance for the purposes of this review, no other evidence on the question of value was received on the trial, than that which related to the cost of the relator’s plant. This evidence was received under the objection of the assessors.

It was error to apply the rule of the statute of 1855 (supra) to the valuation of real estate, The whole scheme, for the taxations of corporations, of which that act forms a part, applies only to personal property. People ex rel. Bay State Co. v. McLean, 80 N. Y., 254. See also opinion of Selden, J., in People ex rel. Parker Mills (23 id., 243).

Ho distinctions in favor of corporations, either domestic or foreign, are made in respect to the assessment and taxation of the estate. The estate, whether of individuals or of corporations, domestic or foreign, is taxed in the town or ward where it is situated, at its just and true value.

The personal property within this state, of corporations,' whether domestic or foreign, is taxed at the place where its principal office, within this state, is located, without regard to the particular situs of the property. The value of such property of domestic corporations is determined by deducting, from the total value of its capital stock and surplus, the value of the real estate; and that of foreign corporations by ascertaining the amount of money invested in its business anywhere in this state. Laws of 1855, chap. 37.

This is the only provision of our statutes, in respect to taxation, which recognizes the amount of investment as any basis for an estimate of value. It applies to foreign corporations, but only to their personal property. To permit the application of the act of 1855 to the real estate of such corporations would, in many instances, result in the anomaly of taxing real estate in a town or ward'other than that in which it is located.

For the error into which the learned referee has apparently fallen, in this respect, the judgment must be reversed.

All concur.

Judgment reversed and new trial ordered before another referee, costs to abide the final award of costs.  