[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *Page 91 Prior to the year 1853, moneyed corporations were assessed upon the amount of their nominal capital, whether its value in fact was more or less than its nominal amount. (People v. Dolan,36 N.Y. 62.) In that year, and again in 1857 (Laws 1857, 2d vol. p. 1), the statute was amended so that the assessment was made upon the capital stock and its surplus profit exceeding ten per cent "at its actual value." The principle of assessing upon the actual value of the stock, instead of its nominal amount, was then introduced. (Authorities, supra.)
The rule of assessing individuals upon their personal property is expressed in different language. It is in these words: "The full value of all the taxable personal property owned by such person, after deducting the just debts owing by him." (1 R.S. 391.) The assessors and the General Term held, that these two provisions furnished, substantially, the same rule. They held, that the contingent liability of the company was not a debt owing by it, and that no deduction could, therefore, be made from the assessment on that account. I agree, that this liability was not a debt owing by the company, and that, if the same facts had been presented in behalf of an individual, he would not have been entitled to the deduction now claimed. If it is a debt, to whom is it owing? If a debt, what is its amount in figures, and upon what policy has it accrued? It is impossible to answer these questions, because, in fact, there is no present debt to any one.
I do not, however, agree in the conclusion of the Supreme Court, that therefore there can be no deduction on account of this circumstance. These questions are pertinent and conclusive in the case of an individual. He is entitled to deduct only the "just debts owing by him." As to him, there must be a creditor to whom the debt is owing, an amount certain or capable of being reduced to certainty, *Page 92 and a contract or judgment upon which a debt arises. Not so, however, as to a corporation like that in question. The rule of assessment, then, is "the actual value" of the capital. If a corporation, or an individual, has an actual estate in possession of $100,000, and is liable as guarantor, or indemnitor, or indorser, or bail, for $50,000, and the principal in all these liabilities is insolvent, so that he will certainly have to pay the $50,000, is not the actual value of his estate reduced by that amount? True, he cannot be said to owe that amount until the lapse of time, or a notice of non-payment, or some other occurrence, will entitle some other party to commence an action against him. His actual estate, however, is reduced in value by just that amount. No assessor or individual could justly say, that "the actual value" of his estate, subject to these contingencies, was as great as it would be if free and clear from them. No man would give him as much for his estate, subject to these claims, as if there were no such claims. Whether tested by the standard of market or selling value, or by what it will ultimately produce to the possessor, the contingent liabilities work a reduction of value. (Oswego Starch Co. v. Dolloway,21 N.Y. 458.) I think it was an error in the assessors to refuse to make these deductions. There was no practical difficulty in reaching a result by the aid of authentic tables, and by such evidence as long established insurance companies can readily furnish. It was the duty of the assessors to act upon the evidence before them, and to adjudge how much the actual value of the stock was reduced by these contingent liabilities, and to deduct from the assessment accordingly. The evidence, as presented, showed, that the reduction would more than equal the surplus as found by the assessors, and there was nothing in contradiction or disparagement of this evidence. Their action is judicial, and to be governed by the evidence before them. All the evidence before them in the present case showed, that there was a contingent liability sufficient to absorb all their surplus, and I see nothing to cast doubt or suspicion upon it. The assessors should have decided in accordance with the evidence. (People v.Reddy, *Page 93 43 Barb. 543; Oswego Starch Co. v. Dolloway, 21 N.Y. 460.) There is nothing in the case to indicate, that the roll is not still in the hands of the assessors, and that they may yet correct their error by striking out the assessment of $40,000 for the year 1866. The judgment should be reversed, and the assessors ordered to correct the roll by striking out said sum of $40,000, assessed to the appellants for the year 1866.
Judgment reversed, and order entered to strike out. *Page 94