People ex rel. Nesmith & Constantine Co. v. Miller

Houghton, J.:

The relator is a foreign corporation, organized in May, 1895, and began doing business in this State in June of that year, with a paid-up preferred capital of $50,000 in cash and a common stock issue of $200,000 for good will. The'Comptroller imposed a license fee of $62.50 based upon the $50,000 only. Subsequently the corporation consolidated with another and issued $30,000 preferred stock for cash and $300,000 common stock for the good will of the consolidating company. In readjusting the tax for the year ending October 31, 1901, the Comptroller appraised the relator’s common stock at sixty-six and two-thirds per cent as capital employed and imposed a franchise tax upon that basis. In fixing the license fee under section 181 of the Tax Law (Laws of 1896, chap. 908, as amd. by Laws of 1901, chap. 558) he computed it on the par value of $30,000 representing the increased preferred stock and on the $300,000 of increased common stock as capital, notwithstanding the fact that he had appraised that stock at sixty-six and two-thirds per cent, and included as well the $200,000 of stock issued for good will which be had omitted in imposing his license fee in 1895, presumably because the Court of Appeals meantime had decided *328that good will was an asset which might be included in the imposition of a franchise tax and license fee. All of the relator’s capital, including its good will, whatever might be its value, was confessedly employed within this State.

The relator insists that the Comptroller had no ngnt to revise his own decision of 1895 and compel it to pay a license fee upon the $200,000 of capital which he then omitted; and, further, that he could not impose a license fee upon the increased issue of stock as-capital at par when his own assessment placed it at only sixty-six and two-thirds per cent.

In both of these propositions we think it is right. This court has held, in decisions handed down at this term, that the Comptroller has no right to review his own decision by arbitrarily reassessing and readjusting a license fee imposed and paid (People ex rel. Spencerian Pen Co. v. Kelsey, 105 App. Div. 132); and also that a. foreign corporation should be assessed upon the amount of capital employed by it within this State and not upon the amount of its. capitalization. (People ex rel. Consolidated Ginseng Co. v. Kelsey. 105 App. Div. 175.)

The license fee should have been computed on the $30,000 of preferred stock, which was assessed as capital at par, and the $300,000' of increased stock appraised at sixty-six and two-thirds per cent,, or on $230,000, at the rate of one and a quarter mills, which would leave the license fee $287.50 instead of $725 as imposed.

The relator also complains that its common stock was appraised, as capital beyond its value. The stock now pays a small dividend and was issued for $500,000 of good will, and the Comptroller had the-right to take into consideration the relator’s own estimate of its value. (People ex rel. Koechl & Co. v. Morgan, 96 App. Div. 110.) We do not feel that his determination in this regard should be disturbed.

The determination of the Comptroller should be modified by reducing the license fee to $287.50, and as so modified confirmed, with $50 costs and disbursements to relator.

All concurred.

Determination of the Comptroller modified by reducing the license fee to $287.50, and as so modified confirmed, with $5(> costs and disbursements to the relator.