#### The People of the State of New York ex rel. American Bank Note Company, Relator, *v.*William Sohmer, as Comptroller of the State of New York, Respondent.

Third Department,

May 7, 1913.

Tax — franchise tax on holding corporation — exemption — construction of statute — section 183, Tax Law —• ascertainment of value of stock—rate of assessment,

A corporation which is a holding company ox the stock of a manufacturing corporation cannot claim the exemption from a franchise tax allowed to manufacturing corporations.

Where a statute imposing a tax is inconsistent the taxpayer is entitled to the reading most favorable to him.

In imposing a franchise tax under section 183 of the Tax Law the average price at which stock has sold should be determined by the different sales irrespective of the amount sold upon said sales.

Certiorari to review assessment of a franchise tax examined, and *held,*that the average price of the sale of stock for the previous year was less than par and that the assessment should be at three-quarters of a mill. Kellogq, J., dissented.

Certiorari issued out of the Supreme Court and attested =on the 14th day of November, 1912, directed to William Sohmer, as Comptroller of the State of New York, commanding him to certify and return to the office of the clerk of the county of Albany all and singular his proceedings had in fixing the *2franchise tax of the relator for the year beginning November *X, 1909,*and ending October *81, 1911.*

*Sullivan & Cromwell [Robert McC. Marsh*of counsel], for the relator.

*Thomas Carmody, Attorney-General [Franklin Kennedy*of counsel], for the respondent.

Smith, P. J.:

In the year for which this tax was assessed the relator was known as the United Bank Note Company. It afterwards bought up the stock of the American Bank Note Company and assumed its name.

The determination of the Comptroller is challenged upon two grounds: *First,*upon the ground that the relator was a manufacturing corporation, and, therefore, not subject to this tax. The fact is that the relator was the holding company of the American Bank Note Company stock and was not itself engaged in manufacturing. Under such circumstances it cannot claim the exemption from taxation allowed to a manufacturing corporation. (See Tax Law [Consol. Laws, chap. 60; Laws of 1909, chap. 62], § 183.)

The further contention is made that under section 182 of the Tax Law the relator can only he taxed on its common stock at the rate of three-quarters of a mill upon each dollar of the amount of such capital stock instead of at the rate of a mill and a half as was determined by the Comptroller. The dividend declared was only four per cent. Under section 182 of the Tax Law, if the dividend be less than six per cent, and the average price at which such stock sold during the year did not equal or exceed the par value, it was required to pay a franchise tax of three-quarters of a mill upon each dollar of the amount of capital stock. It is true that in the latter part of the section it is provided that if the dividend be less than six per cent and the assets exceed the liabilities exclusive of capital stock by an amount equal to or greater than the par' value of the capital stock the rate of taxation is prescribed as a mill and a half. A reading of the statute discloses an inconsistency. Under well-settled principles of construction the taxpayer is entitled to the most favorable reading.

*3The question upon which this court is divided is whether there be sufficient evidence of the fact that the average price of the sale of stock during the year was less than par. By the affidavit of the broker, Dominick, the high and low price of the stock during each month in the year is given, except the month of April, in which there were no sales. From this statement it would appear that the average price at which the common stock sold during the year in question was between forty-seven and forty-eight, with the par value of fifty. In addition to that, the broker has sworn that to the best of his knowledge and belief the average price at which the common stock of the relator sold during said year was less than the par value of said stock. It is contended that this statement of the minimum and maximum price in each month is no proof of the average price at which the stock sold, because in that statement it does not appear how much stock was sold at the prices named. As I read the statute, however, the average price is to be determined by the different sales irrespective of the amount sold upon the respective sales. For instance, if one hundred shares be sold at forty-eight upon one day and ten shares at fifty upon the next day the average price for the two days would be forty-nine. Any other method of determining the average price, reckoning the number of shares sold upon each sale, would present a rule too intricate for reasonable application. In my judgment, therefore, the proof offered and uncontradicted was sufficient to show that the average price of the sale of stock for the year was less than par. Our attention is called to the statement of the relator furnished to the Comptroller prior to the hearing in which it is stated by the treasurer that he estimates and appraises the common stock at fifty dollars per share, “such estimate being based on the price at which small blocks of stock of the company have been sold.” This statement of fact is not at all inconsistent with the fact shown upon the hearing before the Comptroller that the average price of stock sales was less than fifty. The question for the determination of the Comptroller is not his judgment of the value of the stock, but a value determined by the arbitrary method of ascertaining the average price of stock sales during the year. If we are right in this conclusion, the Comptroller *4has improperly assessed the tax upon the common stock at one and a half mills instead of three-quarters of a mill, and it follows that the determination should be modified by reducing the tax on the common stock one-half, and as modified the determination should be confirmed, with fifty dollars costs and disbursements.

All concurred, except Kellogg, J., dissenting.

Determination modified by reducing tax on common stock one-half, and as so modified confirmed, with fifty dollars costs and disbursements to the relator.