
    The People of the State of New York ex rel. The Buffalo Union Furnace Company, Appellant and Respondent, v. John F. Gilchrist et al., Constituting the State Tax Commission, Respondents and Appellants.
    (Argued June 3, 1926;
    decided July 9, 1926.)
    
      Tax —franchise tax — lease by corporation of plant and retirement from, business — franchise tax on original capitalization and upon amount of subsequent stock dividend properly annulled.
    
    
      People ex rel. Buffalo Union Furnace Co. v. Gilchrist, 215 App. Div. 48, affirmed.
    Cross-appeals from an order of the Appellate Division of the Supreme Court in the third judicial department, entered January 11, 1926, annulling on certiorari a franchise tax assessed against the relator for the year 1923, and determining and restating the tax at the minimum provided for in section 182 of the Tax Law. The Tax Commission appeals from the whole of said order and the relator from so much thereof as holds that it was exercising its corporate franchise and was hable for any tax whatever for the year 1923. Relator, a domestic stock corporation, leased its plant for a term of years and retired from business. In-1922, in addition to its regular dividend, it declared a stock dividend of $4,000,000 and issued the necessary additional capital stock. Upon these facts, the Tax Commission assessed a tax of $116,500, being 112% mills on each dollar of the original capitalization of $1,000,000, amounting to $112,500, and 1 mill on each dollar of the additional stock of $4,000,000, amounting to $4,000. The relator contested the validity of the tax, on the ground that it was neither employing capital stock nor exercising its corporate franchise and that the increase of its capital stock was merely the capitalization of a surplus accumulated and added to its working capital.
    
      Ralph Ulsh and John Lord O’Brien for relator, appellant and respondent.
    
      Albert Ottinger, Attorney-General (Wendell P. Brown and Claude T. Dawes of counsel), for defendants, respondents and appellants.
    
      Order affirmed, without costs;
   no opinion.

Concur: Hiscock, Ch. J., Pound, McLaughlin, Andrews and Lehman, JJ. Cardozo and Crane, JJ., vote to reverse order of Appellate Division and confirm determination of State Tax Commission except in so far as said determination includes stock dividends in the computation of the tax.  