The executors of and beneficiaries under the last will and testament of Francis B. Cooley, deceased, appeal to this court from an order of one of the surrogates of the county of New York affirming a former order assessing a transfer tax on shares of capital stock of the Boston and Albany Railroad Company, which shares formed part of the testator’s estate. He was a non-resident of the State of New York, his residence being at Hartford in the State of Connecticut, where he died on November 25, 1904. He owned 426 shares of the capital stock of the Boston and Albany Railroad Com-, pany. Appraisers appointed by one of the surrogates of the county of New York assessed such shares for the purposes of the Transfer Tax Law of the State of New York (Laws of 1896, chap. 908, art. 10, as amd.) at their market value on the New York Stock Exchange as of the time of the decedent’s death. An order was entered in the Surrogate’s Court fixing a tax upon the basis of such assessed value, and the present appeal brings up for consideration the correctness of that orde.r. The shares have been assessed and taxed as are those of capital stock .of a domestic corporation held and owned by a non-resident decedent, and as representing aii interest in property within the jurisdiction of the State of New Y orle which may be assessed and taxed upon its transfer by operation of law or by act óf the owner. If they are of the character ascribed .to them by the appraisers and the surrogate the power to impose some tax existed under the Transfer Tax Law Matter of Bronson (150 N. Y . 1) is a conclusive authority upon that subject. The power to tax the shares, however, depends upon the status in the State of. Nevy York of the corporation by which they were issued. Is it a domestic corporation ? It was organized under the laws both of the State of Massachusetts and of the State of New *390York.' It was formed in 1870 by the consolidation or merger of the, Boston atid Albany Railroad Company, a Massachusetts corpo-. ration, and the Albany and West Stockbridge Railroad Company, a Yew York cprporation, and that consolidation'or merger was had pursuant to the authority- of a special act, of the Massachusetts Legislature (Mass. Acts & Resolves of 1869, chap. 461) and an act of the Legislature of the State of Yew York (Laws of 1869, chap. 917): ' ■ . " ' -
. It has been held that a corporation thus formed, although deriv-' ing its chartered existence from different States, may be regarded in each State as a. domestic corporation.. In Matter of Sage (70 N. Y, 220) a railway corporation organized under the act of 1869, by the consolidation of various ^foreign , and domestic - railroad companies, was held to be a domestic and not a. foreign corporation, - and, therefore, certain provisions of law relating to- domestic corporations were held applicable to the new corporation.. In St. Louis & San Francisco Railway v. James (161 U. S. 562) it .was said that it is competent for a railroad corporation organized ■under the laws of one State, when authorized so to do, with the • consent of the State which created- it, to accept authority from another State to extend its road into such State and receive a .grant of powers to own and control, by lease or purchase, railroads therein, . and to subject itself to such -rules and regulations as may be prescribed by the second State, and that' “ such corporations .may be treated by each, of' the States whose legislative grants they accept as domestic corporations.” In Moody v. Shaw (173 Mass. 375), which, related to the- imposition of a transfer tax upon shares of stock of this same Boston and' Albany railroad, the certificates of which were held by a resident of Maine -at the time of his death, it was- said that so long, as the railroad held a- Massachusetts charter, so long could .that -State prescribe the payment of a' transfer tax as a condition of the right to succeed to stock issued under that charter, and -tit does not matter that there is .also a Yew York charter, and.' that as things are now,’stock issued" under .one is also stock under the other. The fact that it is so is a privilege granted hy the two States -reciprocally. ¡But w.he,never ■ either. State has an- interest in dis-=. tingnishing between the two franchises, it has a right to do- so.” It ■ is .also suggested in the opinion in that case that “ the fact that all *391rights are represented by one certificate might possibly create difficulties as to apportionment where important fractions of the property were in different States, but it would not affect the principle.” That suggestion intimates the real question mooted in this case.
The learned counsel for the appellants argues that the shares of stock involved in this proceeding are, if subject to a transfer tax at all, liable only to one, proportionate either to the value of the corporate property or to the railroad mileage within the State. He has very cogently presented the hardship and inequity of subjecting to a tax, upon the full value, shares which may be Held liable to another transfer or inheritance tax in another State, and he has pointed out that where a tax is levied in the State of Hew York upon the capital or franchise of a corporation organized as this was the tax is levied upon an equitable basis. Thus, by the provision of section 6 of chapter 917 of the Laws of 1869, under which the Boston and Albany railroad was organized, the'assessment and taxation of its capital stock is to be in the proportion that “ the number of miles of its railroads situate in this State bears to the number of miles of its railroad situate in the other State,” and under section 182 of the Tax Law of the State of Hew York (Laws of 1896, chap. 908, as amd. by Laws of 1901, chap. 558) the franchise tax on corporations is based upon the ground of capital employed within the State. If, by analogy or otherwise, the assessment of the shares of stock in this case could be assimilated to or put upon the basis of an assessment of the capital or property or franchise of a corporation within the State, we think the courts would not be reluctant to adopt such a course; but having regard to the nature of the ownership of the shares as defined by judicial authority, and the interpretation given to the pertinent provisions of the Transfer Tax Law, we are unable to do so.
The assessment of capital, property or franchise of a corporation for the purposes of taxation under the general tax laws differs in nature radically from an assessment made for the purpose of the Transfer Tax Law. In speaking of this subject, more particularly with relation to the franchise tax upon such a corporation, the court said in Matter of Palmer (183 N. Y. 240) that it is an error to assume that the assessment of corporate franchises for taxation purposes proceeds.upon the same principle upon which the interest of *392a holder of capital stock is taxed. In the former case tlie. assessment is to he. computed upon the value of tlie property within the State in which the corporate capital is invested. “The assessment of the stockholder, however, is ■ computed upon the. valúe of his intérest in the whole of the corporate property as evidenced by the number' of the shares of' stock which he holds. . * * * They > evidence the extent of his proprietary interest and their assessment for taxation purposes must be upon that interest regarded as an entity,-and js unapportiohable with reference to the situs of the corporate properties.” In the present case so much of the railway of tlie Boston arid Albany railroad as is maintained and operated in Massachusetts must be regarded as property owned by if outside of the State of Hew York. In the Case cited, Mr. Palmer, a resident of the State of Illinois, owned at the time of his death a large number of shares of the stock of the Hew York Central and Hud- ' son Biver railroad. It appeared that thirty-six per cent of the corporate capital of' that company was invested in properties .without the State of Hew York, and it was contended that allowance should be .made for that in- the assessment of the shares- for the purposes of taxation under tlie Transfer Tax Law. The court held that, notwithstanding the fact that the corporation .itself was not taxable. upon the property so owned by it, the value of that property should not be excluded in the ascertainment of the value of the shares for taxation under the -Transfer Tax Law. The- nature of the interest of the-holder of those shares is described as being his right to participate in the net earnings.of the' corporation as" a going concern, - or in that of its assets- upon a dissolution; that the shares represent an interest in the corporate assets'and property regarded as a whole.
If, therefore, the Boston and Albany railroad is to be regarded-as v a domestic corporation, and the shares held by the non-resident owner at the time of his death are subject to. a: transfer tax in this State, we think the Palmer, cáse is- plain- authority for- the proposition that they are taxable as- a'whole and that there can, be no ' separation of those shares into .fractional parts, assigning so much-of their value to property of that corporation within this State'and so much to the property óf that corporation outside of the State, for in the same -case it is held that the tax imposed Under the Transfer Tax Law as applied to these shares is not a tax upon prop*393erty. It is stated in the opinion of the court that the tax imposed by the State upon the transfer of such property (meaning shares of stock of the corporation held by a non-resident) upon the decease of its owner, is not upon the property which passes; it is upon the right of succession to it. “ The Transfer Tax Act operates upon that 'general right to succeed to the interest of the deceased in the corporation and it is inconceivable that the value of the interest upon which the tax is computed, is determinable by the location of the corporate properties.”
It is argued that, under the construction above given, the provision of the Transfer Tax Law ajjplicable here would be unconstitutional. It is unnecessary to enlarge upon that subject. The proposition was advanced and relied upon by counsel in the Palmer Oase {supra), but the court did not deem it necessary to refer to it in its opinion.
The order appealed from should be affirmed, with costs.
O’Brien, P. J., Laughlin and Clarke, JJ., concurred; Ingraham, J., dissented.