
    The People of the State of New York ex rel. Yellow Pine Company, Appellant, v. Edward P. Barker and Others, Commissioners of Taxes and Assessments of the City of New York, Respondents.
    
      Taxation —■ a foreign corporation is taxable upon credits and bills receivable representing goods sold in the State of New York.
    
    Under chapter 37 of the Laws of 1855, enacting that non-resident corporations shall be assessed and taxed on all sums invested in any manner in business in the State of New York the same as if they were residents of this State, such a corporation is taxable upon credits and bills receivable due to the corporation for merchandise sold by it, in the course of the transaction of its business in the State, of New York.
    Ingraham, J., dissented.
    Appeal by the relator,- the Yellow Pine Company, from a judgment of the Supreme Court in favor of the defendants, entered in the office of the clerk of the county of New York on the 10th day ■of March, 1897, upon- an order made at the New York Special Term and entered in said clerk’s office on the 10th day of March, 1897, dismissing a writ of certiorari granted to review the proceedings of the defendants.
    
      John B. Oreen, for the appellant.
    
      James M. Ward, for the respondents.
   Patterson, J.:

This appeal is from an order made at the Special Term dismissing a writ of certiorari- which was sued out by. the relator to review the action of the respondents, commissioners of taxes and assessments of the city of New York, in fixing the assessed valuation of the relator’s property for the purposes of taxation for the year 1896. The relator, is a corporation organized under the laws' of the State of New Jersey, but does business in the city of New York, and has capital 'or property" invested in its business in the State of New York. The commissioners determined, as appears by their return, that the total amount invested by the relator in' the State was the sum of $689,393; that this aggregate amount was made up of items contained in a statement submitted to them by the relator, and of an additional amount of $222,014 which had not been reported by the relator as among its taxable assets. This latter item represents credits and bills receivable, due to the relator for lumber or merchandise sold by it in the course of the transaction of its business in the State of New. York. The only question arising on this appeal is as to the correctness of the action of the commissioners in including the item referred to, in the assessed value of the relator’s property for the purposes of taxation.

Under chapter 3'T of the Laws of 1855, foreign corporations are to be assessed and taxed on all sums invested in any manner in business in this State, the same as if they were residents of the State. It is well settled that the power to tax property of non-residents extends only to such property as is situated within the State exercising the taxing power. (N. Y., Lake Erie & Western R. R. v. Penn., 153 U. S. 628; Hoyt v. Comrs. of Taxes, 23 N. Y. 224.) But as to all such property so within the State, the power to tax is ample. The act of 1855 reaches all sums belonging to foreign corporations invested vn any manner in the State. The manner or form of the investment is entirely immaterial. The test is: Is the property, in whatever shape it may be, employed in the business of the corporation in this State % Is it an asset within this State ? Is it something upon which the corporation is doing business in this State ? Does it remain for the purposes of the business of the corporation within this State 1 If it does, whether it is in the shape of a promissory note or a book credit,/ or in any other form, it is as substantially invested for the purposes o.f business as if it were tangible property, such as goods or merchandise of any description. It is entirely true that intangible property, choses in action and debts, as a general rule1, áre regarded by a fiction of law as having their slims at the place of residence of the creditor. To them the maxim móbilia personam sequuntur applies ordinarily, but those things constituting property which are used for the purposes of trade or business in a particular locality, for all purposes of that trade or business have a situs where they are so used. A banker engaged in business in the city of New York, but residing in the State of New Jersey, nevertheless has all the assets of his business, whether they consist of credits or of tangible securities, in the city of New York. The statute referred to covers the case of property . or sums used in the actual conduct of business within the territory of the State. If promissory notes are physically here, they have a ■situs here for all the purposes of business. They are nothing but evidence of indebtedness. Book accounts which merely show the particular status of certain assets of a business are records of the then present condition of so much of the sum used or invested' ■ in the business as constitutes the items of those accounts. Any other view of such accounts would permit not only, of the evasion of taxation, but of the separation of a going business (which must be considered in its entirety) into component parts and ■of taking out some of the assets for one special' purpose, although they are retained for all the general purposes of business. These ■credits enter into the general business of the corporation transacted in the State of New York. It is not claimed that they do-not constitute active factors in the transaction of that business, but it is only through the application of a fiction of law that they are sought to be removed from the operation of the tax law of the State.

There is nothing decided in the Thurber, Whyland Case (141 N. Y. 122) nor in the Hecker-Jones-Jewell Milling Company Case (147 id. 31) which affects the question now before the court. That question is simply. whether or not, where, merchandise which, if it were in specie within the Stafe, would be subject to taxation, has been sold upon credit in the State, and that credit has not expired,- the amount of the merchandise thus sold and for which the credit is given in books kept in the State, -can be said to be removed from the State when it enters into the general business conducted within the State. In our judgment-, it is merely a transformation from one form to another of a sum invested in the State employed in the current business of the corporation in the State, and it is not removed beyond the jurisdiction of the State as so much withdrawn from investment in business in the State.

The action of the commissioners was right, and the order appealed froni should be affirmed, with costs.

Van Brunt, P. J., Rumsey and O’Brien, JJ., concurred; Ingraham, J., dissented.

Ingraham, J.

(dissenting):

The only question upon this appeal is as to the action of the commissioners of taxes in including an amount of $199,813.23 for goods sold by the relator in this State, such amount being due upon book accounts to the relator, a foreign corporation doing business in this State. The relator fixed the amount invested by it in business in this State at the sum of $463,414. To this sum. the respondents added, for outstanding amounts due for goods sold, less ten per cent, $199,813.23, and deducted from these two sums the indebtedness incurred by the relator in the purchase of property within this State.

Section 1 of chapter 37 of the Laws of 1855 provides that “all persons and associations doing business in the State of New York as merchants, bankers or otherwise, either as principals or partners,, whether special or otherwise, and not residents of this State, shall be assessed and taxed on all sums invested in any manner in said business, the same as if they were residents of this State.”

This statute has been several times considered by the Court of Appeals, and applying its construction of the statute we must determine whether or not money due to a non-resident doing business here for property that it has sold is property invested within the State within the meaning of this section. In the case of People ex rel. Thurber, Whyland Co. v. Barker (141 N. Y. 121) Judge Peckham, in'-delivering■ the opinion of the court, _says: “We are of the opinion that this act does not contemplate the deduction of debts from the sums invested in this State by non-residents. As the person is a non-resident, it is to be assumed that he will, at the place of his domicile, have all of what might be termed his equities adjusted, and that,.if entitled to it anywhere, it will be at such domicile that he will claim and be allowed the right to have such deduction. In his case the statute, of 1855 seizes upon the certain specific sum which he has here invested in the business carried on by him, and that sum is to be assessed .and taxed the same as if the.person were a resident of the State. In using the expression, the same as if they were residents of this State,’ we do not think it was intended that exceptions were to be allowed here the same as if the party were a resident or that deductions from the sum thus invested should' be made as if that were the case. It meant, as it seems to ns, that the sum invested in any manner in business in this State should be assessed in the same manner and form as a resident would be assessed.” And the court, in finally disposing of the case, says: “ The relator, having no right to deduct its debts from the sum it had invested in its business here, it is unnecessary to discuss the question whether the amount of the debts due it should be regarded as any part of the sum invested in its business in this State, because the sum assessed by the defendants is less than the amount which the affidavit of the president of the relator shows was invested in its business in this State at the time of such assessment exclusive of. those accounts.”

From this decision it would seem that the rule to be followed is that under the statute of 1855 the State seized upon a specific property which the non-resident has here invested in the business carried-on by it, and that that sum is to be assessed and taxed as though the non-resident were a 'resident; that the general equities as to the relator’s assets and liabilities, placing on one hand .the amount that is owed to it from others, and on the other hand the amount that it owes others, are to be adjusted at the place of its domicile, where it can have the right to have such general equities adjusted. It is not entitled to deduct from the value of the property invested in this State the amount of its indebtedness, nor is it obliged to pay the tax upon the amount of money that others are indebted to it. The determination of this question must be settled at its domicile. If a non-resident brings property within this State, .that specific property is taxable, although he may owe a much larger sum- of money, or, in fact, may be insolvent. If, however, no such specific property or sum of money is within this State, although such non-resident does business here, he is not taxable, although he may be worth millions. Does it make any difference, as to his liability to taxation, whether the money which he has owing him is owing by citizens of this State or by citizens of a foreign State ? Suppose a person doing business in the State of Hew York, manufacturing goods in the State of Hew Jersey, should sell to a resident of this State certain goods which were shipped from his factory in Hew Jersey, would the debt owing-to him by such citizen of this State be any more property invested in this State than if the person- to whom the property had been sold, resided in Hew Jersey ? We have not a case where bonds or obligations, being the evidence of debt, as here, but the simple case of a person being indebted to a non-resident in a snm of money which such person is bound to pay. It certainly is immaterial whether or not the contract of sale was made in this State, and it seems to be equally immaterial whether or not the debtor is a resident of this State. The general rule that a debt is property at the domicile of the creditor, and not of the debtor, is too well settled to be questioned, and it would certainly seem to be most unjust to subject a person to taxation upon debts due to him, and not allow him credit for moneys due by him. It is manifestly impossible in the case of a non-resident, or foreign corporation doing business here, to make such adjustments. The property that a non-resident.brings to this State and invests here, the statute in question subjects to taxation. But a mere chose in action, a credit to a person, whether engaged in doing business here or elsewhere, is not property invested at all. It is a debt due him which may or may not be paid, depending upon the solvency of the debtor, and there can certainly be no distinction between a debt due to a non-resident doing business in New York from one residing in New Jersey, and a debt due from one residing in New York, as there can be no difference with respect to the liability of a trader as to whether his creditor resides in New Jersey or New York. If a person doing business here, who has sold his property and has parted with his title, giving a credit to the purchaser, is to be charged with the amount owed to him as money invested in business in this State, he certainly should be allowed to be credited with the amount which he owes for money borrowed by him to purchase property to carry on his business. Yet that is exactly what the Court of Appeals said in the Thurber, Whylandcase, that he could not be credited with, because that was an equity which must be adjusted at the place of his domicile.

I think, therefore, that the order appealed from should be reversed and the assessment corrected, by deducting from the assessed value of the relator’s property the sum of $199,813.23 for outstanding amounts due for goods sold, less ten per cent.

Order affirmed, with costs.  