[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *Page 330 The question to be decided upon this appeal is narrow but troublesome. The relator rests its claim to exemption from the license and franchise taxes thus far upheld against it, upon the authority of People ex rel. Niagara River Hydraulic Co. v.Roberts (157 N.Y. 676) and People ex rel. Fort George RealtyCo. v. Miller (179 N.Y. 49). It goes without saying that if the case at bar is not to be differentiated in substantial fact or circumstance from the cases cited, the latter must be held to be controlling, and that will, of course, end the argument in favor of the relator. In each of the cases mentioned the corporations sought to be charged with a franchise tax were held to be free therefrom, on the ground that they were organized for the sole purpose of holding and owning lands, the capital to purchase which was not "employed within this state" within the meaning of the statute, but simply "invested" in the sense in which the latter term was used in People ex rel. Singer Mfg.Co. v. Wemple (150 N.Y. 46).
A comparison of the charters of those corporations with that of the relator, and a short reference to the peculiar circumstances under which each has been in operation, discloses, we think, such substantial differences between the apparent objects and purposes of the corporation at bar and the others referred to as to clearly distinguish the former from the latter, so far as the application of the Tax Law is concerned.
The Niagara River Hydraulic Co. was incorporated in 1832 under a special act (Chap. 116) giving it the right to purchase, hold, lease and convey real estate, but limiting such right to lands on "Squaw Island, at the junction of the Erie Canal with the Niagara River," and empowering it to build, sell or lease raceways, docks and buildings for hydraulic purposes, and to carry on manufacturing upon the same. In 1896 that corporation was notified by the comptroller that, pursuant to chapter 542 of the Laws of 1880, it had been *Page 332 assessed for a tax amounting to $3,600, covering the full sixteen years during which the statute had been in operation. Upon proceedings to review the comptroller's determination it appeared that the land owned by the corporation consisted of a swamp in Squaw island in the Niagara river; that although the par value of its capital stock was $150,000 and the assessed value of its real estate was $125,000 the actual value of each was problematical, since no buildings or structures had ever been erected, no business had ever been done by the corporators and no revenue or return had ever been derived from the land except an annual payment of $45.00 for the grass crop which grew upon it, and a payment of $8,000 for a strip of the land taken by the International Bridge Co. for the bridge erected by it. That was, therefore, the case of a corporation organized forty-eight years before the sections of the Tax Law referred to were enacted, and sixty-four years before the tax was levied, holding specific lands for certain limited purposes which were never exercised, and during the whole period paying real estate taxes on land assessed upon a valuation of $125,000, but, in fact, unimproved and unproductive.
The Fort George Realty Co. was incorporated in 1902 under the Business Corporations Law, with a stated capital stock of $100,000. In 1903 the comptroller notified the corporation that he had assessed against it a franchise tax of $149.10, based upon an appraisal of $99,400 as the value of its capital stock. Upon proceedings to review the comptroller's determination it appeared, as shown by its certificate of incorporation, that the relator there was organized to buy, sell, mortgage, lease and exchange improved and unimproved real estate, and to build, construct and alter houses thereon. The incorporators were the owners, as tenants in common, of a parcel of unimproved and practically unproductive land, and the immediate purpose of organizing the corporation was to take title thereto and raise funds with which to pay taxes and assessments thereon, and the interest upon mortgages to which it was subject. The land had been owned by one *Page 333 Griffen, and the corporators were his heirs at law. After Griffen's death assessments accumulated to an amount aggregating between $60,000 and $70,000 and in that situation the parties were threatened with a foreclosure of one of the mortgages. To save the property from being sacrificed a new mortgage of $100,000 was made, the greater portion of the avails of which were used in paying these assessments and the interest on mortgages, and leaving only a small balance to meet future taxes, assessments and interest.
The corporate powers and the environment of the relator at bar are materially different. Its charter is broad enough to authorize unlimited dealing in real estate of every description anywhere within the United States, and in personal property ofevery name and nature. There is no kind of business in which it may not engage except, possibly, that of manufacturing. Its real estate is extremely valuable and productive, and is occupied by numerous tenants. It is obvious at a glance that the decision in the case of the Niagara River Hydraulic Co. is not an authority in the case at bar, because there was in the former a special and limited charter authorizing a specific purchase and use of designated real estate, under which nothing had been done subsequent to the original purchase of the land named therein, and that purchase had been consummated many years before the Tax Law under consideration was enacted.
The difference between the case of the Fort George Realty Co. and the case at bar is not so apparent, but there is, nevertheless, a distinction. Leaving out of consideration the special circumstances which were probably potential in shaping the decision in the Fort George Realty Co.'s case, and looking solely to the charters of the two corporations as indicating the possible scope of their operations, it is evident that if the relator cannot be taxed under sections 181 and 182 of the Tax Law, then it is impossible to tax any corporation under the same. The right to acquire and sell both real and personal property "and to carry on any other business which may seem to the board of directors of said corporation capable of being *Page 334 conveniently conducted in connection with the purposes above set forth, or calculated directly or indirectly to increase theprofits of said corporation, or to enhance the value of its property or right," is certainly broad enough to bring the relator within the terms of the statute. The learned counsel for the relator argues that the right to tax a corporation depends, not upon the privileges derived from its charter or the law of its creation, but upon what it has actually done or attempted to do thereunder, and he cites the case of People v. AmericanBell Telephone Co. (117 N.Y. 241) in support of his contention. That case, as we read it, simply holds that the question whether a foreign corporation "is doing business within this state," within the meaning of the law providing for the taxing of corporations, is to be determined not from the existence of unexercised powers reserved to it in contracts with other subsidiary corporations, but from the actual character of the business carried on. When that case is critically examined it will appear that the business actually carried on was identical with that authorized by the law under which the corporation was organized. And when we appeal to the reason of the thing it seems plain that the chartered privileges of a corporation as defined in its certificate of incorporation, which is invariably framed in the language of the corporators, should be the index to its relations to the state, rather than the possibly sporadic and shifting exercise of any one or more of a larger number of the powers delegated to it. We are aware that the point now under discussion was not emphasized, and may have been overlooked, in the case of the Fort George Realty Co., but the decision there was clearly a concession to special facts and equities that have no application here, and its doctrine cannot be extended without going to the limit of holding that no corporation, no matter what the expressed purposes of its organization may be, can be taxed under sections 181 and 182 of the Tax Law, so long as it deals only in real estate. Such a decision would, it seems to us, contravene the plain language of the statue which provides (sec. 181) that "every corporation" (with certain *Page 335 enumerated exceptions) "authorized to do business under the general corporation law of this state * * * shall pay a license fee" to be computed as directed. And likewise in section 182 we find a provision that "every corporation * * * organized * * * under the laws of any other state or country" shall pay the same tax for the privilege of exercising its corporate franchises or carrying on its business as a domestic corporation liable to a franchise tax. If the relator were a domestic corporation it would fall under the general provisions of section 182, unless it is within the exception laid down in the Fort George RealtyCo.'s case, and we think it is not.
For these reasons the order of the Appellate Division should be affirmed, with costs.