People ex rel. Platt v. Wemple

Learned, P. J.

The insertion of the words “ or organized, ” by the amendment of 1881 indicates that the legislature did not intend to coniine the third section to bodies which were, in strictness, incorporated, but intended to include also bodies which were organized under the laws of the state. So that the question is whether this company is a joint-stock company or association organized under the laws of the state; and perhaps, as to the tax of 1880, whether it is a corporation; though it would seem by section 3, art. 8, of the constitution'that-the word “corporation” may sometimes be used to include joint-stock companies, so that it may not be inconsistent to speak of a joint-stock company as being also a corporation. We may notice here that a peculiar rule exists as to-what are called “mining partnerships, ” which are formed when several tenants in common of a mine unite in working it. In these cases, partly because there-are several interests in the land"which any owner may transfer, and partly from the necessity of the case, one person may convey his interest without dissolving the partnership. Kahn v. Smelting Co., 102 U. S. 641. It is desirable to observe this, and not to reason in regard to other partnerships from the peculiarity of that class. The counsel for the relator insists that the court of appeals has decided that this third section embraces only corporations. The decisions supposed to establish this are People v. Insurance Co., 92 N. Y. 329; People v. Equitable Trust Co., 96 N. Y. 393; People v. Telegraph Co., 98 N. Y. 67. Now, the question in the first case (aside from that of' constitutionality) was whether the fact that the dividends were derived in, part from exempt securities invalidated the law. The court held that it did' not, because the tax was not on property, but on franchise or business. 210-question was made as to whether joint-stock associations were included, or whether they were not corporations. The court was only defining the nature of the tax as distinguished from one on property. The very section in question used the words “corporate franchise or business,” after naming the-bodies subject to the tax; and, if anything is to be drawn from that opinion,, it is that these joint-stock associations are corporations, for the court says at-page 340 that the aforesaid act of 1881, “after describing the corporations subject to its provisions, continues as follows;” thus including joint-stock companies and associations under that name of “corporation.” But, as we have had occasion' to remark before, decisions of courts are authoritative on the matters necessarily decided, not upon every expression in an opinion. The next case held that as to foreign corporations the tax was upon business. In the third case the counsel for the relator insist that the court declared that the act “deals, as its title declares, with the subject of taxation of corporations, and no other matter.” The court, immediately after these words,, cited the title itself, which mentions joint-stock companies and associations;, thus implying that the title declared that such associations were corporations. But there was really no question presented as to joint-stock associations, and: no decision made. It may be noticed, also, that in the cases in the supremo *583court of the United States, viz., Society v. Coite, 6 Wall. 594, and Institution v. Massachusetts, Id. 611, no distinction is suggested between corporations, strictly so called, and joint-stock associations. Thus it is said: “The privileges and franchises of a private corporation, * * * and all trades and avocations by which the citizens.acquire a livelihood, may be taxed.”

The counsel for the relator insist that this express company is simply a partnership, with no privileges of corporate action under the laws of the state. The decisions of other states that, in those states, such associations are partnerships, or even that they are partnerships in Sew York, have no binding force here. Taft v. Ward, 106 Mass. 518; Railroad Co. v. Pearson, 128 Mass. 445. We must determine the question under our own laws and decisions. Chapter 258, Laws 1849, provides that any joint-stock company or association consisting of seven or more shareholders may sue or be sued in the name of the president. Chapter 153 of the Laws of 1853 provided that, after judgment thus recovered, and execution returned unsatisfied, suits might be brought against shareholders or associates, with some further provisions in this respect. This statute seems to be substantially re-enacted in the Code of Civil Procedure, §§ 1919-1923, inclusive. Chapter 245 of the Laws of 1854 authorizes these associations to provide that the death of a stockholder, or the assignment of his stock, shall not work a dissolution; also that they may devolve on three or more of the partners the sole management of the business. Chapter 289 of the Laws of 1867 authorizes these associations to purchase, hold, and convey real estate, and provides that conveyances shall be made to and by the president. Chapter 937 of the Laws of 1867 authorizes these associations, by consent of stockholders owning two-thirds in amount of the capital stock, to extend the time of existence. Chapter 290 of the Laws of 1868 authorizes the directors, by consent of three-fourths of their number, to reduce the capital stock. Chapter 599 of the Laws of 1881 authorizes a majority of the stockholders at a meeting to reduce the number of trustees. Chapter 505 of the Laws of 1885 requires every such association to file a statement annually of its name, date of organization, law under which it is organized, etc. From these statutes it may be seen that these associations have these privileges: (1) To sue and be sued in the name of their president; (2) not to be dissolved by the death of a stockholder, or by his assignment of stock, which is really to have perpetual succession during their term; (3) to purchase, hold, and convey property in the name of the president, thus making an exception to 1 Rev. St. marg. p. 728, § 49; (4) to extend theo term of existence by consent of two-thirds against the wish of the other third; (5) that three-fourths of the directors may reduce the capital stock; (6) that the stockholders under the act of 1853 were not liable for debts of the association except after judgment and execution unsatisfied against the association. This may be modified by the first sentence of section 1923 of the Code. This express company has in its articles of agreement accepted these privileges by assuming nearly all of them specifically. The right to sue by its president is assumed by this present litigation. Row, these are not privileges which a simple partnership, as such, possesses. It is true that by the Code, § 1919, the right to bring an action in the name of the president is extended to some partnerships. Still that is a special statutory right, and its extension to partnerships is no argument that this express company obtains such right otherwise than by statutory law, not by its own agreement. If an association, by the language of its articles of agreement, assumes the privileges which are given by the statutes of the state, it certainly cannot say that, because the articles make no reference to these statutes, therefore the association is not organized under them. The counsel for the relator insist that the capital stock has none of the legal characteristics of the capital stock of a corporation. In fact it has all those characteristics. The articles of agreement speak of the capital stock, of its shares, of certificates or scrip, of the absolute *584right of assignment thereof “in the usual form,” and of the record of the same. In short, there is no difference whatever. The counsel for the relator also draw an argument from section 5 of the above cited act of 1849, which act is not superseded by the Code. That section was to the effect that nothing in the act contained should be construed to confer on such associations “any of the rights and privileges of corporations, except as herein speally provided.” But, if that section had any meaning, it implied that some rights and priviléges of corporations were'conferred by the act,—as they certainly were. It cannot be justly said by the relator that all these privileges arise from its own agreement, and are such as any partnership might acquire at common law. Two, especially, are of great value, and do not spring from its agreement merely,—-the right to hold property in the name of its president, and the right to sue and be sued in his name, even against and by its own members. At common law, as held in the above cited Massachusetts cases, such suits could not be maintained. We think, then, for the reasons above given that this company is a joint-stock association organized under a law of this state.

We must further consider whether, within the meaning of this statute, it is a corporation. We have already noticed that under the constitution the word “corporation” may embrace what is usually known as a “joint-stock association;” and therefore our conclusion that this company is a joint-stock association is not necessarily conclusive on the question whether it is a corporation under the statute in question. In Thomas v. Dakin, 22 Wend. 9, at page 70, it was said that “a corporate body is known to the law by the powers and faculties bestowed upon it. The use of the term ‘ corporation ’ in its creation is of itself unimportant, except as it will imply the possession of these. ” The court proceed in that case to mention the powers and faculties. They are such as have been above mentioned, with the exception of the right to have a common seal, which, the court say, may be dispensed with altogether, for it has long since been held that corporations may contract without seal; and, as conveyances are to be made by the president, his seal is sufficient to a deed. The court was of the opinion that associations having these powers were corporations. It is only necessary to refer to the very full and exhaustive opinions then delivered. Nor need we refer to all of the subsequent decisions. The correctness of this decision on this point is settled. Supervisors v. People, 7 Hill, 504. It rested, as will be seen, on this principle, that a body which possesses the powers and faculties of a corporation is a corporation. A similar question arose in Insurance Co. v. Massachusetts, 10 Wall. 566. The plaintiff was a joint-stock association organized in England. Acts of parliament had expressly provided against the company being a corporation. A law of Massachusetts imposed a tax. The supreme court examined the question whether the plaintiff was a foreign corporation; and the court held that it was, because it possessed the attributes deemed essential to corporate character. These were (1) an artificial name; (2) the right to sue and be sued in the name of an officer; (3) perpetual succession by transfer of stock; (4) existence apart from the stockholders, which enabled it to sue and be sued by them. All these, and more, this express company has. In Fargo v. McVicker, 55 Barb. 437, it was held on the question of removal to a federal court that an express company like the present was a corporation. To the same effect, Fargo v. Railway Co., 6 Fed. Rep. 787. Neither the case of Bank v. Van Derwerker, 74 N. Y. 234, nor that of Bray v. Farwell, 81 N. Y. 608, decide anything upon this point. An unreported case of Bell v. Staeler, is cited, where it was held that a certain company was not taxable as a corporation. The opinion says that none of the privileges of the company were of the essence of a corporation. See, on the other hand, Bank v. Assessors, 25 Wend. 686, and Sandford v. Supervisors, 15 How. Pr. 172, where the court held such an express company to be a corporation, and, as such, liable to tax*585ation. See, also, People v. Assessors, 1 Hill, 616, where the court held again that associations under the general banking law were corporations, and taxable as such; and remarked: “It may be true * * * that the legislature intended to make a legal being, and give it all the essential attributes of a corporate body, and yet that it should not be a corporation. That the legislature could not do.. * * * Human powers are not equal to the task of changing a thing by merely changing its name.” It seems to us that such is the task the relator undertakes. Having all the essentials of a corporation, it claims that it is not a corporation because it has not been so named, and because of the negative effect of section 3 of the "act of 1854, to which the above-quoted remarks of the court are forcibly applicable.

It must be observed that the question is not as to the privilege of conducting the business of a common carrier. The relator has urged that because it is the common-law right of any person to be a common carrier, therefore the relator has derived no privilege from the state. But this is not sound. We have in this state a multitude of corporations which carry on business of a kind which any private person might carry on; for instance, manufacturing •companies. What they derive from the state is only the privilege of corporate action; not the privilege of manufacturing. Any individual may manufacture. But if several individuals, desirous of manufacturing, wish to do this with the convenience of action possessed by a corporation, then they must obtain from the state that privilege. On the other hand, there are certain things which neither individuals nor corporations may do without authority from the state; for instance, issue notes as a circulating medium. But the privilege which this relator has obtained from the state is that of corporate .action; not that of exercising that action in any special business. The individual members might carry express packages all their lives, or they might form a partnership, and do the same thing till a partner died; and in each •case they would be exercising common-law rights simply. But when, by virtue of statute law, they assume perpetual succession, the right to hold real •estate in the name of their president, and the other privileges which have been .above noticed, they then have organized themselves into a corporate body, a corporation.

The constitutionality of the act under the state constitution we supposed to •be settled. As to the United States constitution, it is to be observed that by stipulation the only question to be argued is whether the relator is taxable for the tax. The mode of computation, therefore, is not in question. See, .also, Telegraph Co. v. Massachusetts, 125 U. S. 530, 8 Sup. Ct. Rep. 961. The case of Insurance Co. v. New York, 119 U. S. 129, 8 Sup. Ct. Rep. 1385, affirmed the same case in this state, holding this tax to be on franchise. See, also, Hamilton Co. v. Massachusetts, 6 Wall. 633.

The question is suggested whether this tax interferes with interstate commerce. This subject has been so fully discussed in the supreme court of the United States that it cannot be profitable for us to do mere than to state the conclusion, that we think this tax does not so interfere with commerce between the states as to be unconstitutional. Delaware Railroad Tax, 18 Wall. 206. The application of the relator to set aside the proceedings of the comptroller is denied, and his proceedings and determination affirmed, with $50 costs and disbursements.

Ingalls, J., dissents.