
    The People of the State of New York ex rel. A. J. Tower Company, Appellant, v. James L. Wells and Others, as Commissioners of Taxes and Assessments in the City of New York, Respondents.
    
      Tax—when a non-resident corporation is not taxable because of capital invested in business in the State of Mew York.
    
    A corporation organized under the laws of the State of Maine had its principal office in that State and had a plant in the State of Massachusetts, where it carried on the business of manufacturing clothing. It maintained a salesroom in the city of New York where it had on hand goods of the average value of 18,000. It kept no bank account in the city of New York and all checks, drafts and other payments for goods were remitted to Boston for deposit. The manager of the New York establishment drew a weekly draft upon the corporation in Massachusetts for moneys sufficient to pay the expenses connected with the business. Some money derived from the business, the amount of which was not large, was kept in the safe in the New York establishment and was used to pay running expenses. About nine-tenths of the goods shipped to the New York establishment were reshipped and distributed to various parts of the country and the remaining one-tenth was sold in the city of New York. Meld, that the corporation was not subject to taxation, pursuant to section 7 of the General Tax Law (Laws of 1896, chap. 908), as a non-resident doing business in the State of New York and having capital invested in such State in that business.
    No hard and fast rule can be laid down for the determination as to what constitutes capital invested in business within the meaning of section 7 of the Tax Law. The fundamental element is the intent of the party as gathered from the nature and character of the business carried on, the method of its conduct and the declarations of the parties in connection therewith. The circumstances of each case must be considered in arriving at a conclusion in that case. O’Brien, J., dissented.
    Appeal by the relator, the A. J. Tower Company, from an order of the Supreme Court, made at the New York Special Term and entered in the office of the clerk of the county of New York on the 20th day of June, 1904, denying the relator’s motion to cancel an assessment made by the respondents upon the capital of the relator invested in business in the State of New York for the year 1903.
    
      Henry B. Twombly, for the appellant.
    
      George S. Coleman, for the respondents.
   Hatch, J.:

The relator is a foreign corporation, organized under the laws of the State of Maine, and in which State it has its principal place of business. Its plant is located in Massachusetts, where it carries on the business of manufacturing water-proof clothing. It maintains and has maintained a salesroom in the city of New York for the past five or six years, and at the time of the levying of the assessment liad goods on hand at its place of business in the city of New York of the value of $13,490, and the average value of the stock kept on hand in such place of business was about $8,000. The store which it occupies is on the ground floor of 35 Howard street; is about 28 feet wide by 100 feet in depth. In connection with this business it has a manager, two salesmen, a typewriter and a bill and shipping clerk. It keeps no bank account in the city of New York, and all checks, drafts and other ¡payments for goods sold are remitted to Boston for deposit. The manager draws a draft upon the relator in Massachusetts upon an average of once a week for money sufficient to pay the expenses connected with the business, although some money, the proceeds of the business, is kept in the safe at its place of business here and is used to pay running expenses. This sum is never very large. The goods which are shipped to the New York house are mainly reshipped and distributed to various parts of the country, although about one-tenth of the goods received are sold in the city of New York; it sometimes runs above that percentage. Much the larger proportion of the goods received are reshipped to points outside the State of New York. Upon this state of facts the defendants determined that the relator was subject to taxation pursuant to the provisions of section T of the Tax Law (Laws of 1896, chap. 908) as a non-resident doing business in this State and having capital invested therein in such business.

The question presented by this appeal is not new. What constitutes capital invested in business within the meaning of this provision of the Tax Law has been the subject of repeated adjudication. No hard and fast rule can be laid down in the determination of such question. The fundamental element in its solution rests largely in the intent of the party as gathered from the nature and character of the business carried on, the method of its conduct, and to some extent the declarations of the parties in connection therewith. It is evident, therefore, that the circumstances of each case are to be considered in arriving at a conclusion, and the necessary answer returned in one case may not apply to another. In People ex rel. Sherwin Co. v. Barker (5 App. Div. 246) this question was considered. Therein the relator, an Ohio corporation engaged in business in the city of Cleveland, sent its manufactured goods to its salesrooms in the city of New York to be sold. The proceeds of the sale of its goods were at once remitted to its principal office in Cleveland, only a sum sufficient being reserved for the purpose of paying the expenses of the business which it conducted in the State of New York. The amount reserved and deposited in bank at the time when the tax was levied was $781.45. The average value of the goods kept on hand for sale amounted to about $15,000. The court held that the relator was only taxable upon its bank account and not upon the property used about the business, or that kept on hand for sale. Exclude the bank account which was taxed and we have every essential element of the present case. Upon appeal to the Court of Appeals this case was affirmed on the opinion below (149 N. Y. 623) and has been since cited with approval. (People ex rel. Armstrong Cork Co. v. Barker, 157 id. 159.) There can be no distinction between that case and the present. The doctrine is made to rest upon the rule laid down in People ex rel. Parker Mills v. Commissioners of Taxes (23 N. Y. 242) and that rule is decisive of this case.'

Numerous cases exist where a different conclusion has been reached, but an examination of each one will show an essential difference between the cases. (See People ex rel. Crane Co. v. Feitner, 49 App. Div. 108; People ex rel. Durand-Ruel v. Wells, 41 Misc. Rep. 144; affd. on appeal, 92 App. Div. 622; People ex rel. Goetz Silk Mfg. Co. v. Wells, 42 Misc. Rep. 86 ; affd. on appeal, 93 App. Div. 613. See, also, Vaughn Machine Co. v. Lighthouse, 64 id. 138.) These authorities discuss the rule announced in the case first above cited and point out the distinction. It is, therefore, unnecessary that we reiterate here the facts and arguments which differentiate them. The rule of the first case being applicable, it follows that the order should be reversed and the assessment canceled, with costs to the relator.

Van Brunt, P. J., Patterson and Laughlin, JJ., concurred; O’Brien, J., dissented.

Order reversed and assessment canceled, with costs to the relator.  