The New York herald. [volume] (New York [N.Y.]) 1840-1920, 1871-05-30

me Following decision Is announced this after.
noon by the Commissioner OF Internal Reyenue:-
TREASURY DEPARTMENT !
EXTERNAL REgENGE DEPAIsrvEsr
WASHINGTON. NAY 40 1871
JOHN III. BAILEY, Collector or internal Revenue
Fourteenth district, New York;
SIR-1he following decision ~ announced "a m
the validity or an internal revenue TAX assessed
against the New York Central Railroad Company
on certain amounts OF money represented by Ger.
tain interest certificates Issued by said company.
The facts are as tOloWS:-
On the 1gth day OF December 1868, tho New York
Central Railroad Company, by It's ,luly authorized
Board OF Directors, adopted the following resolu-
uonS:--
Whereas TIL. company has hitherto expended of Its earn
nas FOR the purpose constructing e1uppna road
aud In The purchase OF raj estate and other properties with
20 eighty per Of tbs capital stock Of the company and
titled TO evidence OF expenditure and arsnt
Of The same AT convenient future perod now there
Resolved Tina. certificate. signed By the president and
orally declaring that such socEbaidcr Is entitled % eighty
S % s o Gt as a sso
luton nt the option OF the company out Of H. future earn
dlvidenis shall be paid on tho share, Of the capital
the e % aa ina, s no sD %s
conpany Whenever the company shall be authorized 20 In
version.
holders Of the ut the Union Trust Company, in the
CITY Of New York on presentation o. their certificates Of
sha s. sndorsci on ire stock oertiie,i.s
Under the authority conferred by these resolutions
certain certificates were issued In the following
form:-
II: New York Central Railroad Company. NO.
Uader resolution Of me Board q prcetors passed Dc:
he holder OF = shares Of the capital stock OF
rata % Other sa ss Go pd es's s
Tine. shall Dc paid upon the shares OF the capt
s:,!aSs!. ,r,r:sssss s the books OF tho
.asss s. :sasd Fiesdsa and VI: ish
andransfer ali interest n tSS above certificate 'o and
90 srso % as
therein mentioned.
In May, 1859, the Legislature of tho State OF Now
York LOCALIZED the issuing OF these certificates and
authorized their conversion into stock Of the COM
panv but no such conversion has ever been made
Tho capital stock or the company ~ the time these
resolutions were adopted was S2s, 7o5 900, ana for
eighty per cent Of the same being S2 900 inter-
issued.
On the I'd OF March, 1870 the Assessor OF the Four
New York made an assessment against this railroad
company, founded on the interest certificates THIS
making tax Of 81, Isl, soo ne added as penalty for
falling to make a return under section ~. 900
The entire assessment was, therefore. 81. 500
II Is the validity Of this assessment that Is now un-
der consideration. Did the law authorize it9 There
was an error IN assessing the penalty Of $1,000:
can be recovered bg some appropriate suit or pro-
ceilings The question Ia as to the tax 81, 800.
Was It In accordance with the lawf
The authority for rho tax Is found in section 122
OF the Of June 30 1864 as amended July 49, 1860.
That section Is In these Words
SIC. 49, And be It further enacted That any railroad,
oS when Or ssene
Of ndeseincss havs been .suea payable In one or mors
ysas after date upon which Interest is stipulated to be
have asc.rsd aiyidsna scrip money
ss S ps wheSer citizens or aen. par. q
ss m no n s cor carried n
he FUND used for shall be sub
coupons, pross sasSs;ss ana
.ss$ss!. ~sshsI ala ss%san,s:
pens Sa seosan, Of interest or coupons and
sn' ana s.s.'':
Oh or Of tax a 1s
Of @ &c S. a o. s1s
the bonis held BY Any pcr
n Or s'ep s a s Ss
fas % c g II. p aa e SS
Interest," coupons dividends and payable
. .ns As syss * aa ' q n
the a.
aarniaon. IN form and manner be prescribed BY
i.ins I'd faithful ssi u, any
Seou ann. 81 or Of e m 81 % % w tho
tho % 81 n sn i s."s anal 4.
or rendering said Us. or return Or Of tho payment Of
eolocon q IL. anl penalty shall So acsordasto
the provisions OF the law In other cases of neglect
In examining this assessment see II It is In &C
cordance with this law It Is pertinent to inquire
issued, and whether tnnt basis SUBJECT or NOT to
the tax OF five per centum under the requirements
OF section IL, above quoted. To answer this IN
curry we lind that tho Board or Directors OF the
New York central Railroad Company, on the 10tn
luton in clear and precise terms. what these int.
rest certificates represented viz.:-
Whereas tas has hitherto expended OF It's earn
.Ac Of .ss other properties with
to eighty per cen, OF the cavt socS Of Tho and
whereas The severs shareholders OF the company are
the same at some convenient future Perod there
Resolved, Tsat certificate signed by the president and
a. n Ss u me
s:hy Of tho amount Of tho capital stock held By
These interest certificates therefore, represent
moneys earnings OF tho Now York Central Railroad.
which had been received from time 10 time, and had
been expended by tho company, but no acknowi-
edgment OF SUCH earnings had ever been declared
until this -, resolution sol of, Of the Board Of
the capital stock OF this company, amounting to
road, had been expended There Is no doubt that
amount or money nad been In the hands OF tho
liable to the tax section IL, above quoted.
Farther, the tax SHOULD have been upon these carn
nave. however been expcnIed, ana they are now
represented by these Interest certificates.
Do the facts OF the expenditure OF tniS amount
of S23 90 G0O and the issue OF these interest cert
Gates TO represent t relieve the New York Central
Railroad Company from the obligation to pay the
amount which is claimeu under sccuon 1872 These
MONEYS having once been In the possession OF tho
company, as earnings created an obligation to
paY the tax on Them which, under the require
inents of the second clause OF tina, section,
required satisfactory account to be rendered to the
Assess Assistant Assessor before that ObligA.
ton could be cancelled. No sucn account was ever
rendered and 1t Is therefore, declared that the OBJ
legation OF the Nc York Central railroad Company
To pay the tax the original earnings or S23036, 00O
and now represented by these interest certificates,
Il not impaired by their ISSUE but Is OF fun force
the present time. You will, accordingly, notify tho
President of the New York Central Railroad Com
pany OF this decision, and Will at once proceed to
collect the tax OF $i,lol 500, which was properly
assessed. Very respectfully,
a. PLEASONTON, Commissioner.