New-York tribune., 1910-02-22
U'MALLEY'S REPORT
ron DRASTIC CHANGE.
[ oAectton Of Special Franchise
TG.r Discussed.

Aioany, Feb. 21.-The annual report of
Attorney General O'MaIlev to the Ieeis-
iature gives information in relation to the
collection Of special franchis. taxes The
report says:
-,t ne necessity Of a drastic change in the
special franchise tax bureau of this de-
paT Tunent when / assumed office is at once
~ tbppaSient gent from the following extracts from
Ihe state Board of Tax commissioners re-
1907 and isos 'e OouS iof '"e Se''S
To illustrate the neglect which has heen
emitted IN the collection of these taxes
II is noted that of the special franchise
assessments made for 1890 the first year
.ar law was in force. there still remain
.tuIsposed Of the assessments against
twenty-five corporations. firms or individ-
S uS representing aggregate assessments
ud ds sS2.elI- OF the assessments made in
1901 the second year of the special fran
.ilse tax law, assessments agEregating
sl"ISfe,3l7 still are pending and the taxes
que upon this amount remain unpaid Fer
the third and for the subsequent years of
lpe special franchise tax law the records
snssN s,aoM steadIy increasing number of as
sesSn1ents being contested IN the courts,
with the total of unpaid taxes due upon
these assessments constantly increasing.
In this class of litigation the State Board
OF Tax Commissioners is required to ap-
pear and defend its assessments. The board
mas no power to employ counsel, but is
required to he represented by the Attorney
General. who in turn is authorized and
universally does designate other counsel
Tor that purpose. The board has no voice
IN the selection or counsel. and during the
period indicated it's members have never
peen consulted IN regard to the trla! or
disposition of any of the important cases
Nor have they been consulted respecting
the basis of the assessments or the theory
upon which they were made by counsel so
deslgnated by the Attorney General to rep
resent them.
There has not been that we'll defined or
systematic direction Of this litigation
which. III the opinion OF this board. IS ao-
solutely essential for the Settlement Of cor
rect principles for fixing the valuation OF
special franchises
Energetic efforts during the year have
produced encouraging progress in relieving
this badly congested situation The de-
partment has undergone a complete reor-
ganization, and I have instituted a new
IoliCv in the disposal of this litigation A
thorough OverhauhnS and rearrangerneht
of the tangled records of the several thou-
sand proceedings was necessary A caro-
index system containing the status OF eacn
I roceeding has been Installed. making it
i,ossitIe FOR rhe first time in the history of
the special franchise department to handls
intelligeDtly the mass of details connect'.d
with this vast amount of litigation: ihIs
department had outgrown the lmltea
space available for II in the genera q
fees. and sepaI ate offices outside the Capl.
tol for It's exclusive use We're engageu ~
order that every facility might be Afforded
this work.
The Attorney General reported thar after
examination Of the existing provisions OF
the tax law relating to the trial OF these
proceedings he determined that the meth
DDS of trial were insufficient 10 meet ti1Is
condition he drafted an Amendment 10 tlie
tax law which provides, in substance, as
follows: % That the court may take such
evidence as it may deem necessary, or may
appoint a referee to take evidence ana
hear try and determine all questions Falseu
by the petition and the return thereto: "
that the court may direct the place or trlal
changed to the county in which the spec'al
franchise under review is siuate1: 20 that
the court may upon the application or the
Attorney General upon cause shown, va
cate any reference heretofore made in any
proceeding instituted to review special
franchise assessment, and (D that the Gov
ernor may upon the application of the At
torney General. on cause shown, appoint
extraordinary terms Of the Supreme Court
to be held in any judicial district and des-
fsrare a Justice to preside thereat. to try
such special franchise cases
BY virtue of this amendment the Supreme
Court has convened in extraordinary ses-
sion in the list. 2d. eth 7th. Sth and sth
judicial districts. the terms being held re-
spectively at New York Brooklyn, Bing-
hamton, Rochester. Buffalo and White
Plains The results accomplished by this
method during the year are gratifying. Up
to January 1. 1910. Iitigations have been ter
minated involving a total assessed Valua-
ton Of S272 COS. .206- These settled proceed
ings reach to every section Of the state
New York Citys finished eases represent
se27. .265. .6eI in valuation, and each judicial
district as follows; %, sl,14S,Soo; Sd 800
$50 4th. $32441S5 5th. S. 49, 400; 9th. S2.3Jj.-
~. 7th ssl2. 80: Sth. $14120,S $50. and sth.
81 6l4. 400
The number of proceedings settled was
about one thousand, most of them since the
decision by the Court of Appeals in the
Jamaica water supply case was handed
down. in which general principles govern
ing the assessment of these special fran
chises were laid down.
The efforts instituted will continue, and 1t
is believed that practically all the proceed
ipss for back years Will be tried or settled
before the end of this year. so that each
years litigation in this department can re-
ceive speedy adjustIpent.