#### The People *ex rel.*Thomas C. Platt, *v.*Edward Wemple, Comptroller.

*(Supreme Court, General Term, Third Department,*

*Filed May 27, 1889.)*

1. Taxation—Joint s|tock companies—What constitutes—Laws 1880, chap. 542, §§ 3, 6, !as amended by Laws 1881, chap. 361.

By Laws 1880, chapter 542, § 3, as amended by Laws 1881, chapter 361, it is provided, that “ every corporation, joint stock company or association whatever, now or hereafter incorporated or organized under any law of this state, except,” etc., shall pay a certain tax estimated on dividends, and if there are no dividends, by a certain percentage on the valuation of the capital stock. Section 6 imposes an i.dditional tax upon the gross earnings of every corporation, joint stock company or association, etc., within the state engaged in the business of transporting freight or passengers. Joint stock companies are authorized to sue and be sued, in the name of theit president, not to be dissolved by the death of a stockholder or by his assignment of stock; to purchase, hold and convey property in the name oil its president; to extend the term of its existence; to reduce its capital stock. *Held,,*that inasmuch as the United States Express Company has, by its articles of agreement, assumed all the privileges conferred by ¡statute upon joint stock- associations, it cannot sue because the articles make no reference to them; that the association is not organized under them; that the company is not a mere partnership, but is a joint stock association organized under a law of this state, and is tax-' able under the Law of 1880.

2. Corporation—What constitutes.

*Held,*that,possessing all the attributes essential to corporate character, it is a corporation, although it may not have been so named.

3. Taxation—Constitutionality.

*Held,*that the taix imposed by the act of 1880; is not an interference with interstate commerce, so as to be unconstitutional. Inqalls, J., dissenting. I

Chapter. 542, -Laws of 1880, section 3, delares that “ every corporation, joint-stock company or association, whatever, now or hereafter Incorporated under any law of this state,” except, etc., shall pay a certain tax, which is estimated by a certain percentage on dividends, and if there are no dividends, by a certain percentage on the valuation of the capital stock, made according to the provisions of section 1.

Section 6, of thp same act, imposes “in addition to the taxes above provided for ‘ a tax upon every corporation formed for railroad,’ etc., purposes and every other corporation, joint stock company or association, etc., etc., engaged in the business ofj transporting freight or passengers.”

This is a tax onj gross earnings for business transacted in this state. !

The said section 3 was amended by chapter 361, Laws of 1881, so as to read in the clause above quoted “incorporated or organized.” It was again amended by chapter 359, Laws of 1885, but not s0 as to change this clause.

The United Stjates Express Company is an association formed by article^ of agreement dated April 22, 1854, signed by five or more persons. The agreement adopts the aforesaid name; provides that its capital stock shall be five thousand shares of $100 each, which number may be increased or diminished by (the board of directors; provides for certificates of stock, and for the assignment thereof, and for the *669assignee being a member of the company, provides that the assignor shall not be liable for subsequent liabilities of the company.

The agreement further provides for the making of assess ments by the directors, to pay losses, and authorizes the directors to forfeit and sell stock when the holder does not pay his assessment.

It provides for the election of directors by ballot, each shareholder being entitled to votes equal to the number of his shares.

It provides that the board of directors may fill vacancies. A meeting of shareholders for election of directors, is to be called at the request of two-thirds in amount.

The full power of management, in every respect, is placed in the board of directors.

Deeds of real estate, bonds and mortgages are to be made ’ to the president and his successors. Suits to be brought in his name.

The death or legal incapacity of an associate is not to operate as a dissolution.

The survivors may prosecute the business. And on the death of a shareholder the survivors may purchase his shares unless his heirs, being legally competent, elect to retain them.

Said company was extended to a further term of twenty years from May 1, 1864, and, by a vote of the directors, was extended twenty years from May 1, 1884.

On the 9th of April, 1888, the comptroller assessed on the company a tax under the aforesaid third section for the years 1880 to 1887, and also assessed the penalties prescribed. On its refusal to pay, the comptroller issued his warrant. This action is brought to review his proceedings and restrain the collection.

It is agreed that the only question is whether, under the laws and the constitution, the company is liable for those taxes, or any of them.

*William W. Mac Farland*and *Clarence A. Seward,*for app’lt; *William A. Poste,*deputy attorney-general, for resp’t.

Learned, P. J.

The insertion of the words, “or organized,” by the amendment of 1881, indicates that the legislature did not intend to confine 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 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 of article 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.

*670We may notice, here that a particular 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 lapd 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 j to observe this, and not to reason in regard to other partnerships from the peculiarity of that class.

The counsel fat 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. *Home Insurance Company*(92 N. Y., 329); *People*v. *Equitable Trust Company*(96 N. Y., 393); *People*v. *Gold and*Stock *Tel. Co.*(98 N. Y., 67). Now the question in the first case (aside from that of constitutionality) was whether the fact that the dividend» 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 br business. No question was made as to whether joint sto'ck 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 aré corporations. For the court says at page 340, that that aforesaid act of 1881, ‘ ‘ after describing the corporations ^ubject 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 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. j

But there wras really no question presented as to joint stock associations, and no decision made.

It may be noticed also that in the cases in the supreme court of the United States, viz., *Society for Savings*v. *Coite*(73 U. S., 594) and *Provident Inst.*v. *Massachusetts*(id., 611), no distinction is suggested between corpora*671tians, 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 New York, have no binding force here. *Taft*v. *Ward,*106 Mass., 518; *Boston and Albany R. R. Co.*v. *Pearson,*128 Mass., 445. We must determine the question under our own laws and decisions.

Chapter 258, Laws of 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 and 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:

*First.*To sue and be sued in the name of the president.

*Second.*Not to be dissolved by the death of the stockholder, or by his assignment of stock, which is really to have perpetual succession during their term.

*Third.*To purchase, hold and convey property in the name of the president; thus making an exception to 1 R. S. m. p. 728, § 49.

*672
      *Fourth.*To extend the term of existence by consent of two-thirds against the wish of the other third.

*Fifth.*That three-fourths of the directors may reduce the capital stock.

*Sixth.*That the stockholders under the act of 1853 were not liable for the 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. Now these are-not privileges which a simple partnership, as such, possesses. It is true that by the Code,1 section 1919, the right to bring an action in the name of the president is extended to some partnership. Still, that is a special statutory right, and its extension to . partnership is no ! agreement that this express company obtains such right otherwise than by statutory law, not by its own agreement, i

If an association by the language of its articles of agreement assumes thé 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 script, of the absolute right of assignment thereof, “in the usual form,” and of the record of the same. Ini short, there is no difference whatever.

The counsel for the relator also draw an argument from section 5 of the ábove 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 specially provided.”

But if that section had any meaning, it implied that some rights and privileges of corporations were conferred by the .act, as they certajinly 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 bq maintained.

We think then; for the reasons above given, that this company is a joint stock association organized under a law of this state.

*673We 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., 7, at p. 69) it was said that “ a corporate body is known to the laws by the powers and facilities 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 facilities. 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. *Niagara*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 *Liverpool Insurance Company*v. *Mass.*(77 U. S., 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 this 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. *Louisville N. A. and C. R. W. Co.*(6 Fed. Rep., 787).

Neither the case of *National Bank*v. *Vanderwerker*(74 N. Y., 234), nor that of *Bray, President*v. *Farwell*(81 N. Y., 608), decide anything upon this point.

An unreported *Case of Bell*v. *Stueler,*is cited, where it *674was 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 of Watertown*v. *Assessors, (25*Wend., 686), and *Sandford, President, v. Supervisors*(15 How., 172, where the court held such an express company to be a corporation, and, as such, liable to taxation. 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 essentials 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. I

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. I

The constitutiotiality of the act, under the state constitution, we supposed! to be settled.

As to the United States constitution, it is to be observed *675that, 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 *Western Union Telegraph Company*v. *Massachusetts,*125 U. S., 530.

The case of *Home Ins. Co.*v. *New York*(119 U. S., 129) affirmed the same case in this state, holding this tax to be on franchise. See also *Hamilton Company*v. *Massachusetts,*73 U. S., 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 more 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,*85 U. S., 206.

The application of the relator to. set aside the proceedings of the comptroller is denied, and his proceedings and determination affirmed, with fifty dollars costs and disbursements.

Landon, J., concurs; Ingalls, J., dissenting