
    New York Terminal Company, Plaintiff, v. Charles H. Gaus, Comptroller of the State of New York, Defendant.
    Third Department,
    June 29, 1910.
    Tax — franchise tax—ferry company in hands of receiver on.foreclosure — liability of one purchasing “ subject to all taxes.”
    A franchise tax is a payment to the State for the privilege of doing business as ■ a corporation and the amount of business does not affect the amount payable to the public for that right.
    The purchaser of part of a ferry property on a sale on foreclosure “subject to all taxes which might be liens thereon,” takes the property subject to the lien of franchise taxes assessed against the mortgagor during the time a receiver appointed by the court in the foreclosure action operated the ferry under the corporate franchise.
    Submission of a controversy upon an agreed statement of facts, pursuant to section 1279 of the Code of Civil Procedure.
    
      William H. Blymyer, for the plaintiff.
    
      Edward R. O’Malley, Attorney-General [C. R. McSparren, Deputy, of counsel], for the defendant.
   Kellogg, J.:

In an action in the Supreme Court by the Knickerbocker Trust Company, as trustee, against the Brooklyn Ferry Company of New York, to foreclose a second mortgage, an order was duly made October 16, Í906, appointing Joseph J. O’Donohue, Jr., receiver for said company, and he duly qualified and took possession of its assets and continued to hold and manage the property of the ferry company until June 25, 1908, when by virtue of the judgment in said' action all of its property, save the franchise to be a corporation, was sold in twenty-five separate parcels “ subject to all taxes which might be liens thereon.” The Hew York Terminal Company, a foreign corporation of Hew Jersey, purchased twenty-four of said parcels and received title thereto and is now the owner thereof. The property was delivered to the terminal company July 24, 1908, and it immediately executed a lease of the same to William O. Madden, who thereupon undertook the operation of said ferries pursuant to said lease in order to close. down the same, but'was restrained by injunction from closing the samé until December 14, 1908, when the injunction 'was dissolved and the boats were thereupon and are now tied up in the ferry slips of said property. Upon reports made by the Brooklyn Berry Company a franchise tax for the year 1907 was stated against it. amounting to $5,625, and for the year 1908, $5,625. The company took no action for the readjustment or review of said tax, although it had due and timely notice thereof. • The plaintiff lias- not procured a' certificate from the Secretary of State pursuant to section 15 of the General Corporation Law. (See Gen. Laws, chap. 35 [Laws of 1892, chap. 687], § 15, as amd. by Laws of 1904, chap. 490,'and revised into Consol. Laws, chap: 23 [Laws of 1909, chap. 28], § 15.) The plaintiff demands judgment that said tax be declared void and that the Comptroller be restrained from taking proceedings to collect the same, with costs of this action. The defendant demands judgment for the amount of the taxes, interest and penalties, together, with costs.

The question presented we think must be considered as settled so far as this court is concerned by Central Trust Co. v. N. Y. C. & N. R. R. Co. (110 N. Y. 250). The only difference we can see between that and this case is that there the receiver was. necessarily actively exercising the franchise of the corporation- in running the railroad. The laws of the State do not contemplate that a private person may operate a railroad carrying persons and property for hire. ( Village of Phoenix v. Gannon, 195 N. Y. 471; Trojan R. Co. v. City of Troy, 125 App. Div. 362.)

If the statutes have confined the privilege of operating a railroad to railroad, corporations, it is evident that the court cannot authorize its officers to do an act which can only be done by a railroad company. • It is, therefore, evident that in that case' the franchise was necessarily and actually used, and no injustice comes from charging upon the property the same tax that would have resulted from its operation if the receiver had not been appointed. He simply took the place under the law and by the order of the court of the board of directors and was exercising the franchise of the corporation in their place.

Our attention has not been called to any provision of law which prohibits or renders it improper for a natural person to operate a ferry, and it is probable that Mr. O’Donohue as an individual could have operated boats and performed any duty which the ferry company did with reference thereto, and if a natural person could perform such service it is clear that the court could authorize him as receiver to do so in administering a property in court.

■ It is not necessary to decide whether Mr. O’Donohue as receiver could have operated the ferry as such without reference to the franchise granted by the State and thereby have escaped this taxation. The record does not establish the fact that he so acted. We assume that the ferry company was operating its ferry pursuant to law prior to the appointment of the receiver, and had obtained from the local authorities the proper license for that- purpose. The record shows incidentally that it had a franchise from the city of Hew York to operate the ferry from the slip to the foot of Forty-second street. It does not appear that the receiver ever obtained such a license; it was unnecessary for him to do so if he was operating the ferry under the corporate frnchise. If a special license had been obtained by the receiver as an individual or as receiver that fact should have appeared in an effort to declare void the tax levied against the corporation. The plaintiff has assumed to show that the taxing officer acted without jurisdiction. The record fairly implies that the ferry was operated under the corporate franchise. The usual corporate reports and returns were made, and it would be a violence to the fair spirit of the record to say that the receiver was not exercising the corporate franchise in carrying on the ferry. It would have been a violation of law for him to operate the ferry without the consent of the local authorities.

As stated, the inference is irresistible that he was operating, as he had the right do, under the license which had been granted to the company and, therefore, that he had assumed the position of the board of directors in managing and carrying on the business of the corporation, and that he did the ferry business under the franchise of the ferry company. It is not material just how far he used the corporate franchise or how profitable it was for him so to do. If the corporate franchise was exercised the tax follows, as it does not depend upon the success or the profits of the business or the amount of business done, but is a payment for the privilege of doing business ás a corporation, and the amount of business .done does hot affect the amount payable to the public for the right to do business. (People ex rel. Fifth Ave. B. Co. v. Williams, 198 N. Y. 238.).

I think, therefore, we are justified in saying, within the authority of the Central Trust Co. case, that the tax was properly assessed, and that when the plaintiff purchased the physical property subject to any tax which was a lien thereon it took it with this burden resting upon it. The other questions raised need- not now be considered.

Judgment should, therefore, pass denying any relief to the plaintiff, and determining that the taxes in question are liens upon the several parcels of property sold by the receiver. The plaintiff purchased a • part of the property subject to the lien of the taxes thereon, but did not by the terms of sale, as stated in the record,become personally liable for the payment of the tax. ¡No personal judgment can, therefore, be rendered for the tax. The defendant should recover costs and disbursements of this action.

All concurred.

Judgment ordered for defendant, ás per opinion, with costs.  