The relator is a domestic corporation with a capital of $1,500,000. The comptroller, under the act chapter 542 of the Laws of 1880, and the acts amendatory thereof and supplementary thereto, determined that its entire capital in the year 1891 was employed in this state, and estimated its value at $3,000,000, and upon that sum imposed the tax authorized by the act. The relator does not complain that the value placed upon its capital was too high. But it claims that none of it was employed within the state, and hence, that none of it could be the basis of taxation under the act, and whether this claim as to the entire capital or any portion of it is well founded is the sole matter for our determination.
The tax could be imposed only as to so much of the capital as was "employed within this state," and the comptroller claimed that the whole of it was so employed. We think he was mistaken.
It is sufficiently accurate for the purpose now in hand to say that the entire capital of the relator was originally invested in patent rights. Corporations were formed in various cities of this state, and to a large extent in cities outside of this state, to use these patents, and to those corporations the relator granted the right to use the patents, and in compensation for such grants it received stocks of such corporations, and during the year 1891 it held such stocks and received the dividends declared thereon.
As to so much of such stocks as was in corporations organized and existing in this state, it cannot be doubted that its capital was employed within this state. So much of its capital, to wit, its patents, as was used to purchase such stocks, was employed for that purpose, and was thus used for the business of the relator. The stocks existed within this state and were kept and held to produce revenue here and hence in every sense were employed within this state. They took the place *Page 546 as a portion of the relator's capital of the patent rights transferred in payment for them.
The stocks which the relator took in companies organized outside of this state stood for so much of the relator's capital invested outside of the state. It took a portion of its capital, to wit, a portion of its patent rights, and employed it outside of the state to purchase those stocks. Its property in those corporations represented by its shares of stock, was outside of this state, and was in no sense employed here. Those stocks had no situs here and were not taxable here under any system of taxation which has ever existed in this state. (People ex rel.Pacific Mail Steam Ship Co. v. Comrs. of Taxes, etc., of NewYork, 5 Hun, 200; S.C., 64 N.Y. 541; People ex rel.Trowbridge v. Commissioners of Taxes, etc., of New York, 4 Hun, 595; S.C., 62 N.Y. 630; People ex rel. Seth Thomas ClockCo. v. Wemple, Comptroller, 133 id. 323; People ex rel.American Construction and Dredging Company v. Same, 129 id. 558.) It is quite true that so much of the relator's capital as was invested in those stocks was not employed in business outside of this state. But that was not requisite to entitle it to the exemption. To make it the basis of taxation it must have been employed within this state, and that it was not so employed, we think we have sufficiently shown. The case of People v.American Bell Telephone Company (117 N.Y. 241), is not an authority for the comptroller in this case. In that case the defendant, a foreign corporation, held stocks in various companies in this state, and it was held that it could not be taxed under the act of 1880, on account of the investment of a portion of its capital in such companies, for the reason that it was not doing business in this state. Before a foreign corporation can be taxed under that act in this state it must not only employ a portion of its capital in this state, but it must also be engaged in business here. (People ex rel. AmericanConstruction and Dredging Co. v. Wemple, supra.) As to a domestic corporation it is sufficient to subject it to taxation under the act that its capital was employed within the state, and it is employed where it is kept and used for the purposes of the corporation. *Page 547
It is said in this record, although not distinctly shown, that the relator also held bonds of foreign corporations issued to it in payment for patent rights granted. We think that so much of the capital as was invested in such bonds was a basis of taxation here, under the act. Those bonds were presumably held at its office in this state, and such bonds, as well as all choses inaction, unless kept, employed, or used outside of the state, have their situs at the domicile of the owner. The bonds took the place of the patent rights granted for their purchase. They were kept and held here to earn revenue for the relator, and they were, in a proper sense, employed here for that purpose.
The relator had granted to various corporations, within and without the state, rights to use its patents, and thus far it had disposed of its patents. But it retained its patents for use in territory not covered by the grants made, and the remaining question is, where were the patent rights not granted employed? We think they were employed at the home office in this state. The main business of the relator was to perfect and protect its patents and to grant patent rights and to do whatever was needful and incident to that business; and that business was managed at and conducted from the home office, and its patents were kept and employed there in that business. A patent is an incorporeal right — a franchise, conferred by the sovereign power upon the patentee. It is personal to him, and until he is divested of the title thereto, like other personal rights, it attends his person and exists where he is or where he puts it to use. We are, therefore, of opinion that the comptroller did not err in including in the capital of the relator, to be estimated for taxation, its patents, so far as they had not been disposed of.
It follows from these views that the order of the General Term should be reversed and that the determination of the comptroller should be reversed so far as it included for the purposes of taxation the stocks held by the relator in foreign corporations, and that the matter should be remitted to the comptroller to the end that he may readjust the tax in accordance *Page 548 with the views expressed in this opinion, without costs to either party in any of the courts.
All concur, except MAYNARD, J., taking no part.
Judgment accordingly.