#### The People of the State of New York ex rel. The Forty-second Street, Manhattanville and St. Nicholas Avenue Railway Company, Appellant, *v.*State Board of Tax Commissioners, Respondent. The City of New York, Intervenor, Respondent.

First Department,

July 10, 1913.

See head note in *People ex rel. Third Avenue B. B. Go.*v. *Tax Comrs. (ante,*p. 731).

Appeal by the relator, The Forty-second Street, Manhattan-ville and St. Nicholas Avenue Railway Company, from an order of the Supreme Court, made at the New York Special Term and entered in the office of the clerk of the county of New York on the 15th day of May, 1913, confirming an assessment against special franchises of the relator for the year 1910 at $4,206,000, and dismissing the writ of certiorari.

*Joseph P. Cotton, Jr. [George S. Franklin*with him on the brief], for the appellants.

*William A. McQuaid,*for the State Board of Tax Commissioners, respondent.

*Curtis A. Peters [Addison B. Scoville*with him on the brief], for the city of New York, respondent.

Laughlin, J.:

This relator formed part of what was known as the Third avenue railroad system. Although this proceeding was heard separately, it was brought on for a hearing with the Third avenue case, in which we have written an opinion. *(People ex rel. Third Avenue R. R. Co.*v. *Tax Comrs.,*157 App. Div. 731.)

The relator on precisely, the same, or like, evidence, with the exception that the figures are different, makes the same claim in this proceeding as in that with respect to the rate of return both on tangible property and intangible property, salary of receiver, interest on deposits, reproduction value as distinguished from depreciated value, development expenses, per*761centage of gross receipts paid to city, replacement and interest; and the court ruled on these questions to the same effect as in the Third avenue proceeding. Our views, expressed in the Third avenue proceeding, applied to the facts in this proceeding, require a modification by deducting the salary of the receiver and the payments made to the city, and by reducing the deductions from the operating expenses on account of items for renewals, replacement and maintenance of equipment and way and structures from $44,228.57, based on like testimony given in behalf of the city, to $18,951.99, the amount as shown by the evidence for the relator, and by capitalizing the net income at seven per cent instead of at six per cent, and by the affirmance of the rate of return on the tangible property at six per cent, and of the action of the trial court in taking the present or depreciated value of the tangible property in the streets, as distinguished from the reproduction value, and in refusing to add development expenses to the tangible property, and in including interest on deposits in the gross receipts.

This results in a reduction of the net income representing the value of the intangible elements of the special franchises from $307,823.52 as found at Special Term by $12,000 for salary of the receiver, plus $53,861.01, amounts paid to the city, plus $25,276.58, the amount erroneously deducted from the operating expenses, aggregating $91,137.59, making the net income, unless further additions or deductions are required, $216,685.93.

Two further items require consideration. The court excluded from the value of the tangible property two parcels of real estate which the relator claimed should have been added and declined to allow a deduction from gross receipts of the taxes paid thereon. The court found that this real estate was not used in connection with the special franchises in question, and left it out of the calculation altogether, making no addition to the gross receipts on account of rent received therefrom. The real estate in question consists of two parcels; one was a *loft building*at 120 East Forty-second street, valued at $120,000. The assistant to the chief engineer of the Third Avenue Company testified that part of this building was rented for commercial purposes and that part was used by the company. The relator failed to show what use the company *762made of this loft building, and it cannot be presumed that it was used in connection with operating these special franchises. If the building was required in the operation of the franchises, that fact should have been shown, and the relator would have been entitled to a return on the entire value and to a deduction for taxes, and the. rent received would be added to the gross receipts. The evidence, however, is wholly inadequate to have this parcel of real estate considered on that theory or to enable the court so to regard it. The relator owned two buildings between One Hundred and Twenty-ninth and One Hundred and Thirtieth streets at Broadway and Twelfth avenue. One of them it used and it was allowed a return thereon. The other it rented and did not use in connection with these special franchises, and the court also excluded that from consideration. These rulings are sustained by our opinion in the Third avenue proceeding.

The value of the intangible elements of these special franchises is, therefore, to be ascertained by capitalizing said net income of $216,685.93 at seven per cent, which shows that it was $3,095,513.28. The value of the tangible property in the streets was $1,312,869.15, and these, together, make the total value of the special franchises $4,408,382.43. On this valuation the relator was entitled to equalization on the basis of ninety per cent, as in the Third avenue case. This- gives $3,967,544 as the proper assessed value.

It follows that the order should be reversed, the writ sustained and the asssessment reduced to $3,967,544.

Ingraham, P. J., Scott, Dowling and Hotchkiss, JJ., concurred. ■

Order reversed, writ sustained and assessment reduced to $3,967,544. Order to be settled on notice.