
    The People of the State of New York ex rel. The National Enameling and Stamping Company, Relator, v. Nathan L. Miller, as Comptroller of the State of New York, Respondent.
    Third Department,
    March 22, 1906.
    Tax Law — license and franchise tax of foreign corporation.to be assessed on basis of capital employed within the State — when Appellate Division will not. correct assessment—what debts' of corporation, to he deducted in valuing capital.
    A foreign, corporation doing business in this State should be assessed for its license to dp business and for a franchise tax oh the basis of the capital employed by ii in this State, and not on the basis of the capital stock so employed.
    When an erroneous rule of assessment has been adopted, the matter will be remitted to the Comptroller for reassessment,, as the Appellate Division will not make such assessment in the first instance, and because on a further hearing the testimony may be changed.
    
      It seems, that such foreign corporation is not entitled to offset its whole indebtedness throughout the country to diminish the value of its capital employed in ■ this State, but should only deduct its indebtedness within the State.
    Ceetiobabi issued out of the Supreme Court-and attested on the --day of October, 1903, directed to Nathan L. Miller, Comptroller of the State of New York, commanding him to certify and return to the office of the clerk of the county of Albany all and singular his proceedings had in relation to an assessment, against the relator fdr franchise taxes for the years 1899, 1900 and 1901, and for a license.fee.'
    
      Louis Marshall, for the relator.
    
      Julius M. Mayer, Attorney-General, and James G. Graham, Deputy Attorney-General, for the respondent.
   Chester, J.:

The relator is a foreign corporation having preferred and common stock, and this is a proceeding by certiorari to review the determination of the Comptroller in assessing it for a franchise tax under' section 182 of the Tax Law for the years 1899, 1900 and 1901, and for a license fee under section 181 of such Tax Law. During the years in question' the relator paid a dividend of seven per centum on its preferred, but paid no dividends on its common stock.

Section 182 of the Tax Law (Laws of 1896, chap. 908, as amd. by Laws of 1901, chap. 558) provides that the franchise tax imposed upon a foreign corporation shall ■ “ be computed upon the basis of the capital employed by it within this State.”

Section 181 of the Tax Law (as amd. by Laws of 1901, chap.'558) provides that the license fee imposed upon a foreign corporation shall “ be computed upon the basis of the capital stock employed by it within this State.”

It has recently been decided that the basis for the assessment of the license fee against a foreign corporation under such section 181 is the capital employed in this State. (People ex rel. Consolidated Ginseng Co. v. Kelsey, 105 App. Div. 175; affd., 182 N. Y. 526.)

The Comptroller, acting before this decision was made, assessed the license fee against the relator on the basis of the capital stock, instead of on the basis of the capital employed in the State. It also appears that he assessed the franchise tax on the basis of the capital stock and not of the capital employed in the State. Having concededly adopted an erroneous basis for the assessment of both the license fee and the franchise tax, we think his determination must be reversed and the case remitted to him for a new hearing upon the merits, as we do not think we should undertake to modify the determination in such a ease, as that in effect would be to make an assessment in the first instance in this court. This we should not do, for the further reason that the testimony might be materially changed upon a rehearing.

The relator insists, however, that it is not liable to any tax whatever. It is entirely clear that it has, during the years in question, employed a large amount of its capital in this State. This is practically conceded, but it urges that its debts are greater in amount than the capital so- employed. It appears that the indebtedness which it seeks credit for in the reduction of its assessment was contracted for its general business throughout the country and not for the use or on account of its business in this State. Nor does it appear how much, if any, of such indebtedness relates to the business here. Manifestly it would, not be entitled to deduct -itsx entire indebtedness incurred for the prosecution, of a business extended through the, country in arriving at the amount for which, it should be assessed in this State. We are in no position, therefore, to determine now how much, if any, of this indebtedness should be taken into account in making an assessment, and more than this, on the new hearing the proof as to the amount of capital employed in this States may be materially different from that upon the hearing which is now the subject of review, só that the whole matter should be remitted to the Comptroller.

All concurred.

Determination of the Comptroller reversed, with fifty dollars costs and disbursements to the relator, and the matter remitted to the Comptroller for a new hearing.  