People ex rel. Trojan Realty Corp. v. Purdy

Scott, J.:

This is a proceeding by writ of certiorari to review the assessment of relator’s real estate for the purposes of taxation in the year 1915. It comes to us upon an appeal by defendants from an order denying their motion tó dismiss the proceeding for reasons to be hereinafter considered.

Sometime in the year 1914 the president of the relator corporation consulted an attorney, whom he had previously consulted on other matters, with reference to attempting to obtain a reduction of the assessment of relator’s real estate. This attorney, who now represents the relator in this proceeding, had in May, 1914, organized a corporation under the name of the Expert Property Appraisers, Inc., the incorporators being the attorney himself and two clerks in his office. The president of the corporation, though not an incorporator, was one Francis C. Wilde, who had theretofore been engaged in some form of business connected with real estate. The purposes of the corporation as set forth in the certificate of incorporation were very broad. It is only necessary at present to consider the purpose expressed as follows: To act as experts and appraisers with respect to the value of real property wherever located and to act as agent, broker, representative or in any other capacity with reference to the reduction of taxes and assessments of real property wherever located and to employ any and all lawful means on behalf of owners of such real property or otherwise in an effort to effect such reductions.”

When relator’s president had consulted the attorney and authorized bim to attempt to obtain a reduction of the assessment, the latter, instead of attending to it personally, turned the matter over to the corporation which he had organized, and a written application for a review and reduction of the assessment was presented to the tax commissioners who in the *705city of New York act as assessors. This petition was signed and verified by Francis C. Wilde, who described himself as agent for the owner of the property. In the body of the application was a request that all notices with regard thereto should be addressed to Expert Property Appraisers, Inc., at its office in the city of New York. A notice was in due course sent to Wilde or the association of which he was president, as provided by section 37 of the Tax Law, requiring the person assessed or his agent or representative to appear and be examined respecting the complaint concerning the assessment. No one did appear at the time appointed and Wilde, who had signed the application for a reduction, declined in writing so to appear. The commissioners refused to reduce the assessment, whereupon the attorney above mentioned sued out the present writ of certiorari, the petition thereto being signed and verified by relator’s president.

Mr. Wilde, who had signed the application to the tax commissioners for a reduction of the assessment, describing himself as agent for the owner of the property, and who at the time was president of the Expert Property Appraisers, Inc., testified before the Special Term that he was not and never had been the agent of the relator, the Trojan Realty Corporation, and had never known any of the officers of that company. He further testified that the Expert Property Appraisers, Inc., above referred to, had been organized at his suggestion, one of the purposes being to engage in the business of obtaining the reduction of taxes upon real property; that the agreement between himself and the attorney was that the fees realized from that business, being fifty per cent of the amount by which any tax was reduced, should be divided equally between himself and that attorney; that it was proposed to employ one Tribelhorn as expert witness who was to testify, as required, both before the tax commissioners, and in case of certiorari proceedings, before the court; that for this service Tribelhorn was to receive a fee ranging from $10 to $100, which was to be paid him only in case a reduction was obtained, and that was to come out of Wilde’s share of the fee.

It is quite clear that the scheme thus devised by Wilde and *706his attorney partner and the business intended to be carried on by the corporation which they formed embraced vicious features which have been condemned both by the Legislature and the courts. In the first place the business contemplated by the corporation obviously involved practicing law either by itself, or in the name of an attorney selected by it. To arrive at this conclusion it is not necessary to determine whether or not an appearance before the the tax board, clearly a quasi judicial body, is such practice of the law as is only justified by an attorney. Certainly suing out a writ of certiorari is as much practicing law as is the commencement of an action, and it is evident from the documentary and other evidence that the application tothe tax commissioners was not a bona fide effort to obtain favorable action by that body, but merely the perfunctory performance of a formality which was necessary in order to lay the foundation for a judicial review of the assessment by certiorari.

One evidence of this fact is found in the circumstance that the application to the tax board was made upon a form which contained a number of questions to be answered by the applicant, so framed that the answers thereto might reasonably be expected to assist the commissioners in arriving at a just conclusion as to the value of the property, and yet not one of these questions was answered. Other evidence is to be found in the fact that the person assuming to represent the owner or its agent refused to appear before the board, when requested so to do, and thus evaded an opportunity to furnish information which might have resulted, if the property was in fact overvalued, in a reduction of the assessment. These circumstances, as we consider, sufficiently establish the fact that this application to the tax board was not made in good faith with the intent and expectation of inducing favorable action by that board. So also it seems to be quite clear that the attorney who sued out the writ did so upon the retainer of the Expert Property Appraisers, Inc., and not upon that of the relator. It is true that he had been consulted by relator’s president and had been by him authorized to take steps to have the assessment reduced. This would have justified him in having his’client appear before the tax board, or perhaps in *707appearing himself in behalf of his client, and, if the board refused to act, in suing out a writ. But he elected not to take this obvious and straightforward course, preferring rather to turn the whole matter over to the corporation which had been organized for the purpose of doing this kind of business. His employment to sue out the writ of certiorari was undoubtedly by that corporation and not by the relator.

We are clearly of the opinion that the principal business which the Expert Property Appraisers, Inc., was organized to do, and the only business which it ever did do, to wit, the reduction of the assessment of real estate for taxation purposes, contemplated and necessarily included the practice of law by the corporation either in person or through attorneys employed by it and under its domination and control. It was, therefore, organized for an illegal purpose, and its practices were illegal. (Business Corp. Law [Consol. Laws, chap. 4; Laws of 1909, chap. 12], § 2a, as added by Laws of 1909, chap. 484; Penal Law, § 280, added by Laws of 1909, chap. 483, as amd. by Laws of 1911, chap. 317;* Matter of Pace, 170 App. Div. 818; Meisel & Co. v. National Jewelers Board of Trade, 90 Misc. Rep. 19.)

Another and most objectionable feature of the scheme of those who organized the Expert Property Appraisers, Inc., was the design to use as an expert witness before the tax board and the court, a person whose compensation for his services in testifying would be entirely contingent upon the successful outcome of the endeavor upon which he was employed. (Matter of Imperatori, 152 App. Div. 86, 89.)

We do not hold that a property owner or person assessed may not apply to the tax board for the reduction of the assessment through a lay agent, if that agent be a person properly qualified and duly authorized, and providing that the application is made in good faith with the honest purpose of obtaining favorable action by the board. But this was evidently not such a case. Not only does it appear affirmatively that neither Wilde nor the Expert Property Appraisers, Inc., was ever appointed agent by the relator, but neither of them possessed the prescribed *708qualification of an agent in such case. Section 37 of the Tax Law (Consol. Laws, chap. 60; Laws of 1909, chap. 62)* provides as follows, concerning applications for the correction of assessments: “ § 37. * * * Such complainants shall file with the assessors a statement, under oath, specifying the respect in which the assessment complained of is incorrect, which verification must be made by the person assessed or whose property is assessed, or by some person authorized to make such statement, and who has knowledge of the facts stated therein.”

The obvious purpose of thus qualifying an owner’s agent is that the tax board should be put into possession of reliable information from one. who knows the facts, to the end that it may act intelligently upon the application. A corporation which has had no prior relation to or knowledge of the property assessed cannot in the nature of things be thus qualified, and Wilde, who signed and verified the application in this particular case, confessedly had no personal knowledge on the subject. The application to the tax commissioners, therefore, upon the validity of which all subsequent proceedings depended, was not sufficient under the terms of the statute. It cannot be said that the tax commissioners waived this defect because they acted upon the petition to the extent of looking into the complaint, for the defect did not appear upon the face of the petition.

Furthermore, relator’s proceedings were fatally defective, as the basis for a review by certiorari, because the person who assumed to represent the relator as its agent refused to appear before the tax board for examination when requested so to do. Section 37 of the Tax Law provides as follows: If not satisfied that such assessment is erroneous, they [the assessors] may require the person assessed, or his agent or representative, or any other person, to appear before them and be examined concerning such complaint, and to produce any papers relating to such assessment with respect to his property or his residence for the purpose of taxation. If any such person, or his agent or representative, shall wilfully neglect or refuse to attend and be so examined, or to answer any material question put to *709him, such person shall not be entitled to any reduction of his assessments. ”

The purpose of this provision, as well as of that above quoted, respecting the qualifications of an agent, is to enable the assessors to pass intelligently upon the claim for exemption, or reduction, and if a person claiming such exemption or reduction willfully refuse to appear when summoned he forfeits his right to have his application granted, and cannot obtain a review by certiorari of the refusal so to grant it. (People ex rel. Horton v. Ferguson, 120 App. Div. 563; People ex rel. Brown v. O’Rourke, 31 id. 583.)

There are thus to be found two fatal defects in the proceedings taken in relator’s behalf looking to a judicial review of its assessment, to wit, that the person undertaking to represent it as agent had never been appointed by relator, and had no knowledge of the facts, and that he refused to appear before the tax board when legally summoned so to appear.

The refusal to reduce the assessment under these circumstances cannot be reviewed by certiorari.

These considerations were quite sufficient to call for a dismissal of the writ, but even in a broader view the proceeding should have been dismissed because contrary to the statutes, cited above, forbidding the practice of law by corporations or by attorneys employed by them to act in behalf of others.

If the attorney who was consulted by relator’s president had proceeded to act under that retainer and had himself taken the proper steps by virtue of that retainer, his client’s interests would have been protected. He elected, however, not to do this, but to turn the whole matter over to a corporation which he had organized to do this class of business. As has already been pointed out the application to the tax board was merely perfunctory an& pro forma, made not for the bona fide purpose of getting a reduction from that body, but as a preliminary to this appeal to the court by writ of certiorari. The whole proceeding both before the tax board and before the court was carried on by the corporation, and it is a mere coincidence that the attorney selected by this corporation happened to be the same one who was originally consulted by the relator. His appearance in this proceeding was due to his relation to and employ*710ment by the Expert Property Appraisers, Inc., and not to the relation which he happened to bear to the relator. The employment of the last-named corporation to effect a reduction of the assessment, which necessarily involved the rendition of strictly legal services either by the corporation itself or by an attorney selected by and responsible to it, were contrary to the statute and illegal. That illegality tainted every step that was taken in the proceeding, from the filing of an application with the tax board by a person falsely describing himself as the agent of the relator, down- to the suing out of the writ of certiorari. In our opinion this taint of illegality vitiated the whole proceeding.

It follows that the order appealed from should be reversed, with ten dollars costs and disbursements, and the writ dismissed, with costs.

Clarke, P. J., Smith and Page, JJ., concurred; Dowling, J., dissented.

Since amd. by Laws of 1916, chap. 254.— [Rep.

Since amd. by Laws of 1916, chap. 323.— [Rep.