The sun. [volume] (New York [N.Y.]) 1833-1916, 1910-12-11
INHERBOROUGH OVERlAXED
No PENALTY IMPOSED IRON ar
FOR LEASING THE ELEt tTED.
Court sf Appeals Re,ersrs the D~r,>ion
below Gross Earnings subject To
state Tax Not stretched 10 inclti'ic
the EarnlnSs of the ~ubw ~ DIV islon

The Court Of Appeals has ordered II ne"
franchise tax assessment OF tn" proper
Of the PETERBOROUGH Rapid Transit Com
pany for the year 1901 10 1909. thus an
nulling the assessment made Nv sat"
Comptroller Williams and setting al-It"
the Judgment OF the Appellate" Division OF
the supreme Court which affirmed the
State Comptrollcr's assessment.
Both the lnicrborough ami the stat"
Comptroller appealed from tn" "rier Il
the Appellate Division III. Comptroller
had held that under ite franchise for
operating an elevated railway under
lease the peterborough should pay an
annual tax Of per cent. upon IN" gross
earnings derived not only from IN"
operation of tn. elevated road bur ais
from tn" operation II its iud"p"nlrn,
subway line and also per cent. upon TIA"
amount II dividends paid IN 'S,.-- II
per cent. upon m. actual amount uf pad
UP capital employed IN IN. operation e
both the subway and elevated the
gross receipts from each road amounted
to several millions - dollars \ year ard
the PETERBOROUGH mad" no protest agi,lusf
paying tax upon tn. gross r-C.r'ts Il
tn. elevated. The Appellate pNl-l,n
oNerrulsd the part Of III" ass. ru"nr
relating To the lax on dIvId,.nd-
On its appeal the marlborough con
tended that u II exempted from paying
any tax upon i's franchIs" ~ endowed
ia the operation ~ the subway under "a
section Of tn" rapid transI; act II 1901
which stated that IN" corpnrat ton ovcra'
ing the subway should -" "N-mut from
taxation III respect 10 IT. Iur.r,'-r under
the contract amt To- all u.s. e. rIpunut
although IN. exemption did not .Nrcnd
To- real property
Judge HIsCoCk. who wrut" the Court
OF Appeals decision. said that the Court
did not believe that the statut" m qu.--
ton WAS broad enough Ia sustain IN"
lnrerhorough's claim To- exemption from
the payment of any franchise tax IN IT,
subway operations. since it, prUvi- ions
merely related to contracts for fh" con
struCtIon and operation Of tn" road
Judge Hiscock says the exemption du"-
not extend beyond the interest acquired
and the property used III carrying "Ut ia"
contracts for the equipment and "I"ri-
ton of the roads alt houRh IT." exemption
might have been mad. broader II m"
L~gislat ire had fully fur---.n tn. present
statutes for the taxation If franchl-e-
Although holding that Their. wa. NO.
general exemption from franchise taxa
the Court OF Appeals - unable L. agree
with the views of the Comptroller and
the Appellate Division that the Inter
borough BECAUSE 1t operates an elevated
railroad under lease II subject T.
franchise Assessment measured upon
the receipts from tbs. subway a we'll at
the elevated. the decision Appealed from
being based upon a literal Interpretation
OF the statute that every CORPORATION
operating an elevated railroad shall be-.
subject 10 an annual tax upon it, gross
earnings from all sources within thus
State.
Judge HisCock saws that Their" ~ no
propriety or justice in compelling a cor
poraton using its franchise to- or"rat"
an elevated railroad. aimed at bv the
statute. to pay for II tax on it, receipts
in a different and entirely distinct hu-i-
ne-s and for the same reason the Inter
borough should not I've assessed for
dividends declared upon II, Ss5. 100. 90" u
capital invested IN the sIl way. lH-
Court points oTt that the view, "x,,r..--..d
do not lead t. CONCLUSION that m"
Interhorough dove not CON. within Hnv
~ the provisions uf m" franrhI~,. tax
law. alt hougn II cannot hc Assessed under
the elevated railroad statute. JUdt"
Hiscock leaves that question "f how .
can he taxed for f'ItrIr" con. Liberation. n
necessary