The sun., 1906-01-27
BOTH TAX LAWS AFFIRMED.
MORTGAGE AND STOCK TRANSFER
LEGISLATION UPHELD.
Appellate Division Decides That the Legls.
lature Did Not Exceed Its Jurisdictio Ion
Justice Ingrahaln Dissents In ~ Ock
Transfer Case Other Unanimous.

| The Appellate Division of the Supreme
| Court handed down decisions yesterday
affirming the validity of both the stock
transfer tax law and the mortgage tax
| law. As the statutes in both cases were
/ attacked on practically the same ground
| the decision in one case s made to hinge
largely on the decision in the other The
| decision in the mortgage tax case was
! unanimous, but Justice lngraham wrote
| dissenting opinion in the stock transfer
! case holding that the law. If carried to
! its logical conclusion. might lead to con-
| fiscation of the shares taxed. lie said:
| an considering that question we must
| bear in mind the principle firmly establ shed
! in this State that the constitutional validity
, of the law is to be tested not by what has
/ been done under it but what may under its
! authority he done. II tax of two cents
! upon the sale Of each share of stock Of the
face value (sloo can be imposed. a tax
| of $40 upon such share can he imposed,
( which would in effect. confiscate all shares
/ Of stock which were Of the market value
of $40 per snare or less.
IF this tax is upheld do not see why the
! Legislature could not impose tax on the
sale of wheat or any other commodity, fin
/ ing an arbitrary value upon the property
/ to be taxed or select any other species
Of property and tax a sale or delivery of
: it, the tax to- be based upon value or as
Sessed value to he fixed by the Legisa-
turc
The tax here sought to be imposed is.
as | view it, of a very different character.
shares Of stock OF INCORPORATED companies
/ are selected, and upon the sale of such
/ stock there is imposed a tax, not based
upon the value of the property or the
! amount for which ii is actually sold, but
upon what Is called the face value Of the
! stock. the value which rarely if ever rep
resents the true selling value.
! consideration Of the principle which
! the Court Of Appeals applies where the
constitutional rower Of the Legislature in
relation to taxation has been discussed
| has satisfied me- that the tax can not be
sustained without a violation of the con-
sti;utional provision that no person shall
be deprived Of his life, liberty or property
without duo process Of law
The prevailing opinion is written by
I Justice Laughlil and Is concurred in NV
Presiding Justice O'Brien and Justices
Mclaughlin AMI Houghton. The opinion
| is discussed at length whether or not there
was any ground for the objection that the
/ Legislature had not compiled with the re-
I qurement that the bill should be printed
and on the desks Of the legislators three
| days before action was taken.
The bill was introduced in the Senate
and while under discussion there was
printed for the lower house and placed
on the desks of the Assemb blymen. When
! it came to that branch of the Legislature
( it was acted upon without waiting for three
/ days to elapse. The Appellate Division
! holds that all the provisions of the law in
this respect were complied with lnasm,ch
! ~ the Assemblymen had had annie time
to inspect the provisions Of the measure
| Coming down to the constitulona'ty of
the act the opinion says:
/ "The sole inquiry is, therefore, has the
Ieeislat lre exceeded its jurisdiction and
! enacted tax measure in contravention
/ Of the State or rat 'onal Constitution The
presumption is IN favor of the validity
! of the statute and we may not declare il
/ void unless beyond a reasonable doubt It
! has been enacted in violation of cont rolling
constitutional provision. There Is no eX-
! press limitation in onr State Constitution
on the taxing power of the Legislature.
| The only provision of the State Constitution
! TeltAl upon Nv ltf ItdloT ~ Sttll ION U pI
Article of the State Constitu ution, which
provides: No person shall be deprived
OF life, liberty or property without due
process of law. nor shall private property
be taken for public use without just com.
pensation.'
The law does not deprive people within
the State of equal protection. 1t does not.
think, deny to any person the equal pro-
| l,,, ,,,I .,.itb h.
prohibition of the clause Of the Federal
Constitution relating TO the eqnal protection
Of the laws
THE statute is not in conflict with the
commerce clause of the Federal Constitu-
ton. The tax is imposed only on transfer
made within the State and it operates alike
on residents and non-residents.
What has been said disposes of the con-
tention that the act in imposing a tax on
the sales of shares of foreign corporation
owned by a nonresident taxes property
without the jurisdiction of the State. 1t
follows that the order should be affirmed
Albert j. Hatch. stock broker who has
all office in this city, but who lives in Con-
necticut, brought the proceedings as a
test of the validity Of the law He was
arrested last June on the charge of having
. IL
delivering stock without making a bill or
memorandum of sale or without afIixing a
stamp, as required by the law. The case
was appealed and John G. Milburn appeared
for the relator. District Attorney Jerome
appeared for the respondent and Detective
Rsardon, who made the arrest and Attor-
ey-General Mayer for the State
The test case in the mortgage tax action
was brought by Michael II. Eisman, who
refused to pay the tax gainst John II. j
Ronner, then Register Of New York county
The Supreme Court decided against him
and the matter was carried to the Appella te
Division The decision upholdng the law
follows almost exactly the reasons put forth
nv the court for approving the validity OF
the stock transfer law. Justice lngra ham
who wrote the dissenting opinion in the
latter So. writes the unanimous opinion
in this case,
He says in passing that the clause pro,
yiding that under no circumstance shal
the mort ga gor pay the tax may he uncon'
stitutional in that IT violates the right OF
contract. but a. thar point was not brought
up the court did not pass upon it, The