
    The People ex rel. The Commonwealth Ins. Co., App’lts, v. Michael Coleman, et al., Comm’rs, etc, Resp’ts.
    
      (Supreme Court, General Term, First Department,
    
    
      Filed June 19, 1888.)
    
    Taxation—Value of capital stock of a corporation—How to be ESTIMATED.
    In the estimation of the value of the capital stock of a corporation the indebtedness of the corporation is a proper subject for consideration.
    Appeal from order of special term made in certain proceedings taken by certiorari to review the action of the commissioners of taxes in assessing the capital stock of the appellant.
    
      Joseph Larocque, for app’lts; George S. Coleman, for resp’ts.
   Van Brunt, P. J.

In the able opinion delivered by the learned justice who heard this case in the court below, the manner in which the tax commissioners may determine the value of the capital stock of a corporation for the purposes of taxation is entirely correctly set forth and is in accordance’with the principles laid down by the court of appeals in the case of the People ex rel., The Hide & Melting Co. v. Asten (100 N. Y., 591) referred to by him.

But there is one point which we think has been overlooked in the consideration of this assessment of the value of the capital stock.

' It is undoubtedly true that after an estimate of the value of the capital stock has been made there is no authority for the deduction of the indebtedness of the corporation, but it is also true that the indebtedness of a corporation is a proper subject for consideration in estimating the value of the stock and in the conclusion at which the learned justice arrived in this case in determining the value of the capital stock the indebtedness of the corporation was not considered. There being no market for the stock of this company, its value was attempted to be ascertained by determing the value of its assets, and the aggregate value of its assets was $345,885.21. If, however, the corporation was indebted, this did not represent the actual value of its capital' stock, because such value was reduced by the amount of its indebtedness. All the assets going to make up this aggregate had been assessed at their full market value, no deduction, whatever, being made therefrom. Consequently the value of those assets was diminished in determining the value of the capital stock by the amount of the indebtedness. Therefore, deducting the' amount of the indebtedness, which it is conceded, amounted to $24, - 666.16, the total value of the capital stock of the corporation, was $321,219.05.

This deduction, however, the learned judge challenged upon the ground that it was improper to consider this indebtedness in ascertaining the value of the capital stock of a corporation liable to taxation.

In this it appears he has fallen into an error. It would be improper to deduct such indebtedness after having determined the value of the capital stock, because that would be deducting the indebtedness twice, but in estimating the value of the stock, the indebtedness of the corporation is a proper subject for consideration.

Of this value of $321,219.05, the sum of $304,575 consisted of government bonds as to which the company was entitled to exemption. The amount of surplus, therefore, which the corporation had, was $16,644. But it was not liable to taxation upon this surplus, because it was entitled to exemption upon surplus, until such surplus exceeded ten per cent of its capital—in this case, $30,000. The surplus in the case at bar was within this sum and consequently the corporation was not liable to taxation.

■ We are of opinion, therefore, that the judgment of the special term should be reversed and the assessment vacated.

Beady and Baetlett, JJ., concur.  