New-York tribune., 1903-01-06
FRANCHISE LAW RULING
Report that Supreme Court WI De
ckare II Unconstitutional.

Albany, Jan. St is said at late hour here
tonight that the lid Appellate Division OF the
Supreme Court will, within twenty-four hours,
hand down decision declaring the Franchise
Tax law passed by the legislature OF 1899 un-
constitutional so far as 1t relates to the State
constitution The decision is expected at noon
tomorrow and Is one Of the most important.
both TO the State and corporations. ever given
in this state So far $12O0o00o in taxes is in
volved. the State by the decision practically
losing that amount OF money and the corpora
tions gaining It. while at least $4,OO0.OOO a year
in future revenues also is involved
The constitutionaIity Of the Franchise Tax
law was attacked by the interested corporations
on two propositions. namely:
Ffrst-That il violated the home rule provfs-
ion of the State constitution in that 1t gave 20
the State Board of Tax Commissioners the
power to assess real estate for the purposes or
local taxation, a power Whlch Is Teposeu IN
local boards OF assessors
Second-That il violated the provision Of the
national constitution. which holds inviolats
contracts made between individuals ana cor
pOrations or other corporate bodies
1t was also alleged that it violated the na-
tionaI constitution because a corporation. when
the privilege TO use streets and highways was
granted to it for the purpose of its corporate
existence. entered into contract with the
power vested by statute to grant TO them the
franchises. which constituted a contract beyond
the power of the legislature any public body
to modify to break.
The litigation To test the constttuttonality OF
the law has been going on for the last two years
1t was instituted originally through the pro-
curement by the corporations affected Of writ
of certforari for a review by the courts OF the
assessment placed or their special franchises
by the State Board of Tax Commissioners. un-
der the Special Franchise Tax act. Corporations
operating forty-seven of the largest franchises
in greater New York combHed in a test case
to carry the litigation to the Court Of Appeals.
and higher if necessary. These corporations in
cluded the Metropolitan Street Railway Com
pany the Brooklyn Rapid Transit Company
and the various electrical SUBWAY companies
operating in the greater city. Writs of certi-
orari procured in the lid Judicial District were
referred by Judge D. Cady Herrick to former
Chief Judge Robert Earl of the Court of Ap-
peals. as referee.
Judge Earl took testimony and heard argu-
ments covering a period of several months.
Last spring he handed down decision declar-
ing the franchise tax act TO be constitutional in
all it's features and uphoIGing it's Interpretation
by the State Board of Tax Commissioners IN all
except one point.
The board has assessed special franchises at
their full value, whereas, according TO his inter
pretation they should have been assessed at the
same rate as other species of real estate in the
same tax districts.
Judge Herrfck affirmed pro forna. and with
out opinion, the decision of Judge Earl for
the purpose of permitting az appeal To be taken
as expeditiously as possible 20 the Appellate
Division This appeal was taken and argued at
the December session Of the Appellate Division.
handed down, the State will appeal to the higher
court.