In determining the value for assessment of the railroad's property within the town of Fallsburgh for the years 1936 through 1942, the trial court properly took into account the fact that the company's "net operating income" had been insufficient to meet fixed expenses during those years (see People ex rel.Delaware, L. W.R.R. Co. v. Clapp, 152 N.Y. 490, 494; andPeople ex rel. Lehigh Valley Ry. Co. v. Harris, 168 Misc. 685,693-694, affd. 257 App. Div. 912, affd. 281 N.Y. 786). Reduction of the value employed for assessment by a factor derived from the average annual deficit was not arbitrary (seePeople ex rel. Rome, W. O.R.R. Co. v. Hicks, 105 N.Y. 198,202).
Obviously, operation at a loss is unrelated to the value of the property unless the railroad's income fairly reflects the earning capacity of its property. As appellants contend, the prudence of the management thus may be drawn in issue. However, the railroad's burden on that issue was met here by proof which sustains the findings that the drop in revenue was due to economic *Page 79 factors beyond the control of management. None of the facts upon which appellants rely indicates that a prudent management would have acted differently in 1936 through 1942, or in the years immediately prior. Absent such proof, the earnings of this railroad must be accepted as fair indication of its earning capacity.
The seven proceedings were joined for trial by agreement, and any evidence which is relevant to each year may be employed in the determination for that year. Operating losses during 1936 through 1941 manifestly are pertinent to the value of the property in 1942. Although the extent of loss during 1942 would not have been available to the assessors in July, 1936 — when the assessment for that year was made — the employment of satisfactory evidence as to losses during subsequent years can occasion no prejudice in these proceedings. Under these circumstances it was proper to employ the average annual net income in constructing the factor for "economic depreciation".
Respondent's property in the town of Fallsburgh — excluding Brown's Pond, not employed for railroad purposes — should be valued for assessment during the years 1936 through 1942 at 8/22, or 36 1/3%, of land value plus depreciated reproduction cost of improvements. Those orders of Special Term for the years 1937 through 1942 must be modified, since the proper equalized assessment for each year will be greater than the amounts asserted in the protests of the railroad. However, the order for 1936 will remain unaffected. Section 606 of the Civil Practice Act compels remission of these proceedings to the Appellate Division since that court has not specified those findings of the trial court which were modified (Civ. Prac. Act, § 602, subd. 2; Tax Law, § 293).
The orders of the Appellate Division should be reversed, and the matters remitted to the Appellate Division for further proceedings not inconsistent with this opinion, without costs.
LOUGHRAN, Ch. J., LEWIS, CONWAY, DESMOND, DYE, FULD and BROMLEY, JJ., concur.
Orders reversed, etc. [See 300 N.Y. 752.] *Page 80