#### The People of the State of New York ex rel. The New York Central and Hudson River Railroad Company, Relator, *v.*The Public Service Commission, Second District, as Successors of the Board of Railroad Commissioners of the State of New York, and Others, Respondents.

Third Department,

November 13, 1907.

Railroad — public convenience and necessity—Statute of Limitations — when certiorari to review issuance of certificate not barred — acts not constituting payment of ten per cent of capital.

The former Railroad Commission was not authorized to issue a certificate of public convenience and necessity until furnished with a receipt from the State Treasurer showing that the tax required by section 180 of the Tax Law had been paid, and a determination to issue such certificate did not become final and binding until the delivery of the certificate to the railroad after the payment of said tax. Hence, certiorari to review the determination to issue-such certificate is not barred if the writ was issued and served within four months from the time the certificate was delivered to the railroad, although the railroad failed to produce a tax receipt until four years from the time the' certificate was actually signed had elapsed.

A railroad does not comply with section 2 of the Railroad Law, requiring the payment in cash of ten per cent of its capital stock at the time of filing its certificate of incorporation, by the incorporators depositing their demand note for the amount with a bank secured by the consents of property owners and other papers, belonging to the railroad and immediately drawing a check for the amount to an attorney who indorsed the check and returned it to the bank in payment of the note, it being understood that the proceeds of the note were not to be drawn for any purpose except for the payment of the note.

*284Such transaction was a mere form and did not authorize the Board of Railroad Commissioners to issue a certificate of public convenience and necessity.

Although after the filing of the affidavit of payment of ten per cent of the capital stock, officers were elected and by resolution ratified the action of the incorporators, such ratification was without effect because) the tax aforesaid not being paid and the certificate of public convenience and necessity not having been delivered, the corporation was not entitled to do any corporate act.

Certiorari issued out of the Supreme Court and'attested on the 21st day of November, 1905, directed to the Board of Railroad Commissioners of the State of New York and others, commanding them to certify and return to the office of the clerk of the county of Albany all and singular their proceedings had in regard to the-application of the Buffalo, Niagara Falls and Rochester Railway Company for a certificate of public convenience and necessity under section 59 of the Railroad Law (Laws of 1890, chap. 565, added by Laws of 1892, chap. 676, and amd. by Laws of 1895, chap. 545).

*Harris & Harris [Daniel M. Beach*of counsel], for the relator.

*Horace G. Pierce [James M. E. O'Grady*of counsel], for the respondents.

Kellogg, J.:

The respondents’ contention, that the writ of certiorari wag not granted and served within four months after the determination became final and binding, as required by section 2125 of the Code of Civil Procedure, is not well taken. The certificate sought to be reviewed was signed and dated July 15, 1901, at which time the Board of Railroad Commissioners notified the respective counsel that it had determined to grant it.

Section 180 of the Tax Law (Laws of 1896, chap. 908), as amended by chapter 369 of the Laws of 1897,* provides that no stock corporation shall have or exercise any corporate franchise or powers, or carry on business, until the tax required by that section has been paid, but that a railroad company need not pay the tax .at-the time of filing its certificate of incorporation, but shall pay the s&me before the Railroad Commissioners shall grant a certificate as *285required by section 59 of the Railroad'Law, and that such certificate shall not be granted by the Board of Railroad Commissioners until it is furnished with the receipt for the tax from the State Treasurer. And section 59 of the Railroad Law provides that no railroad company shall exercise the powers conferred by law upon it, or begin the construction of its road, until the Railroad Commissioners shall have certified, among -other things, that public convenience and a necessity require the construction of said railroad. The tax required by said section 180 of the Tax Law was not paid by the company until August 11, 1905, and the certificate remained in the possession of the Railroad Commissioners until the 14th day of August, 1905, when it was first delivered by the board to the receiver of the railroad company. Prior to the payment of this tax no one was capable of delivering or receiving the certificate, and the certificate did not become final and binding upon the relator until its delivery after the payment of such tax. The writ was served November 21,1905, less than four months after the certificate was in fact issued by the Railroad Commission, and the relator is, therefore, properly in court.

The conclusion in the return that the relator is not aggrieved by the determination sought to be reviewed here is overcome by the evidence returned, and the return read as a whole shows that the relator is aggrieved.

Section 2 of the Railroad Law (as amd. by Laws of 1892, chap. 676) provides that at the time of filing, a certificate of incorporation of a railroad company shall have indorsed upon it or annexed to it an affidavit of at least three directors, that at least ten per cent of the minimum amount of capital stock has been subscribed thereto and paid in good faith in cash to the directors named in the certificate, and that the filing of every certificate where the amount of stock so required has not been in good faith subscribed and paid in cash shall be void.

The relator contended before the Railroad Commissioners, and contends here, that the respondent railroad company has never complied with this provision, and, therefore, that it was not entitled to receive the certificate as to public convenience and necessity. The issue was tried and the Railroad Commissioners determined that the section had been duly complied with. Such finding is *286■ against the law and. the evidence; there was no payment in cash of the ten per cent, and at most there was only a paper transaction apparently designed to evade this provision of the law, or to comply with the letter of the law .and evade its spirit. The material facts constituting the alleged payment, are that upon Saturday, April 14, 1900, the- three directors named in the certificate and one Castle, an attorney, appeared at a trust company in Eochester and made their demand note to the trust company for $125,000, which was ten per cent of the minimum amount. of capital stock. One Tone had in a box certain consents of property holders, maps and other papers relating to the proposed railway, in which the acting directors were interested. This box was delivered over to the bank ostensibly as collateral for the note. Immediately the four makers of the note drew a check for the same amount to three of the directors, and they indorsed the check to Tone, who immediately indorsed the check, and it was handed back to tiie bank in payment of the' note. The whole transaction took place within from twenty minutes to an hour. It was understood that the proceeds of the note were not to be drawn from the bank for any purpose except for the payment of the note, and' it fairly appears that the note and the chebk with the various indorsements were handed over to the bank at the same time. In fact the bank never became a debtor to the makers of the note and they had iio money deposited with it. The company never received the payment of any sum in . cash ; the directors never received any cash for' the co'mpany. The whole transaction was a mere form by which the directors interested in the consents, maps and papers, in the box, intended to make the stock to be issued to them and Tone *“*paid up ” and to lay some foundation for the affidavit to be filed with the ¡certificate two days later. . The affidavit that the ten per cent had been paid in cash was attached to and filed with the certificate, but it was not true, and the provisión of law as to the payment of the tén per cent in cash never, was complied with. April 17, 1900, the day ■ after the certificate was filed, the officers of the company were elected and the directors adopted a resolution reciting that the three directors reported that they had received the subscription money to the amount of the par value of stock subscribed, and had purchased for the railroad company of Tone the rights óf way, maps, etc., for *287$125,000 cash and $85,000 of the capital stock of the company and approving and ratifying the action of the'three incorporators.

, But we have seen that in default of payment of the tax and before the certificate of *“*convenience and a necessity ” was granted thé company could not buy property or do any corporate act; therefore, the attempted ratification was without effect. The recital in the resolution that cash was paid, when cash was not paid, does not meet the requirement that the amount must in good, faith be paid in cash. The determination appealed from, therefore, should be annulled upon the law and the facts, with fifty dollars costs and disbursements to be paid by the respondent railroad company.

All concurred.

Determination annulled upon the law and facts, with fifty dollars costs and disbursements to be paid by the respondent railroad.

*

 Also amd. by Laws of 1901, chap. 448. Since amd. by Laws of 1906, chap. 524.— [Rep.