Case Name: PEOPLE ex rel. METROPOLITAN ST. RY. CO. v. STATE BOARD OF TAX COM'RS
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1903-01-23
Citations: 80 N.Y.S. 85
Docket Number: 
Parties: PEOPLE ex rel. METROPOLITAN ST. RY. CO. v. STATE BOARD OF TAX COM’RS.
Judges: 
Reporter: West's New York Supplement
Volume: 80
Pages: 85–107

Head Matter:
(79 App. Div. 183.)
PEOPLE ex rel. METROPOLITAN ST. RY. CO. v. STATE BOARD OF TAX COM’RS.
(Supreme Court, Appellate Division, Third Department.
January 23, 1903.)
1. Taxation — Assessment of Corporate Franchises — Commission' to State Authority — Violation of Constitution.
Laws 1899, c. 712, amends Tax Law, § 2, subd. 3, by adding to the subjects of taxation therein specified the franchise to construct, maintain, or operate over or under streets or public places of any municipality the tangible property thereon which was previously assessible as realty, and provides that the value of such tangible property, plus the value of the franchise, shall be assessed together, under the designation of a “special franchise,” by the state board of tax commissioners, which shall report sucji assessment to the local assessor, to be placed on his roll; taxes to be levied and collected against it as against other property. Bel A to violate Const, art. 10, § 2, guarantying the local selection of local officers, in so far as it withdraws the tangible property from the jurisdiction of the local assessors, though the amount of property thus withdrawn is relatively small.
Smith and Chester, J.J., dissenting.
Appeal from special term.
Certiorari by the people of the state of New York, on the relation of the Metropolitan Street Railway Company, against the state board of tax commissioners. From an order modifying and sustaining a tax assessment on relator’s property, it appeals. Affirmed on the facts, and reversed on the law, and assessment vacated.
The relator herein seeks to review and vacate the assessment made against it by the state board of tax commissioners under the provisions of the so-called special franchise tax act; and the. proceedings are taken under the provisions of article 2 of the tax law, as amended by chapter 712 of the Laws of 1899. A certiorari was issued, and the issues made by the return thereto were duly referred. Upon the coming in of the referee’s report, the special term approved and adopted the same, and made an order modifying the assessment in some particulars, and, as so modified, sustaining the same.
Argued before PARKER, P. J., and SMITH, KELLOGG, CHASE, and CHESTER, JJ.
Henry A. Robinson and Sheehan & Collin (Wm. H. Page, Jr., of counsel), for appellant.
John C. Davies, Atty. Gen. (J. Newton Fiero, of counsel), for respondent.

Opinion:
PARKER, P. J.
The first question presented by this appeal is whether the provisions of the law which authorize the assessment and tax complained of are violative of section 2 of article io of our state constitution. Such act (being chapter 712 of the Laws of 1899) first amends subdivision 3 of section 2 of the tax law by adding to the subjects of taxation therein specified, the right or franchise to construct, maintain, or operate upon, over, or under the streets or public places of any town or municipality in the state, the tangible property thereon, which was already specified in the section as being real estate, and therefore assessable. The value of such tangible property, plus the value of the right to maintain and operate the same, are thereafter to be assessed and taxed together, and is denominated in the act as a "special franchise." No criticism is made that this addition to the taxable property named in the section violated any provision of the constitution, but the act further provides that the assessment of such special franchise shall be made by the state board of tax commissioners. That board is required to fix the valuations of all such special franchises, wherever found in the state, and to report such assessment or valuation to the proper local assessor; and such local officer is required to place such special franchise upon his roll of the taxable property in his district, at the valuation so received, and the tax is thereupon levied and collected against the same in the same manner and for the. same purposes as against the other property on such roll. This provision, it is claimed, violates the above-cited section of the constitution, for the reason that it deprives the local assessors of a portion of their duties as such assessors, and directs the performance of the same duties by officers who are not chosen by the electors or any authorities of such locality. In the Raymond Case, 37 N. ,Y. 428, this section, which is familiarly known as the "Home Rule" provision of the constitution, received judicial construction in its application to the subject of assessment for the purposes of taxation. In that case the legislature, by chapter 410, Laws 1867, sought to transfer the duties of the commissioners of taxes and assessments for the city of New York, who were officers appointed by local authorities, to a board of three commissioners appointed by the governor, by and with the consent of the senate. At the time of the adoption of the constitution of 1846, such duties of assessment were, and for a long time had been, performed by district assessors. By various acts passed in 1850, 1857, and 1859, the legislature had regulated the performance of such duties, and changed the officers who were to perform them. But in each instance the selection of such officers was left to local authorities. The act of 1867, however, sought to change the selection of such officers from the city to the state, and it was at once challenged as being violative of the home rule provision of the 'constitution. The question came before the court in the case above cited, and it was there distinctly held as follows: That, beyc«id controversy, the office in question was exclusively a city office; that the duties imposed by the act upon the new board, although broader in their extent, were essentially the same as those exercised by the city assessors in 1846; that the plain intent of the section of the constitution in question "was to preserve to the localities the control of the official functions of which they were then possessed, and this control was carefully preserved (consistent with the power of the legislature to make needful changes) by restricting the power of appointment of other officers to perform the same functions, to the people, or some authority, of the locality"; that hence the act of 1867 deprived the people of the city of a right secured to them by the constitution, and was therefore void. This case has never been reversed or modified, so far as I can ascertain, and would, I think, be conceded by the respondents in this case to be a controlling authority in a case where the conditions were in all respects similar. But in what respect does that case differ in principle from the one before us ? There the act sought to transfer from local assessors to those appointed by the state authorities the duty of assessing all the property in the city of New York. The decision is that the legislature was without authority to do that thing; that the function of assessing such property was by the constitution secured to officers selected by the locality. The act before us does not transfer the duty of assessing all the property in the various tax districts to the state assessors, but only all of a certain specified kind. Now, if the legislature is without authority to transfer the duty of assessing all, I am at a loss to discover whence it gets the right to interfere with the assessment of any part of such property. The right to have all the property in its locality assessed by officers chosen by itself was secured to each town and municipality in the state by the constitutional provision in question, and, in my judgment, the legislature has no more power to infringe upon that right by withdrawing from its operation one particular species of property than it has to withdraw a dozen. It is clear that by the statute before us the right to assess a distinct kind of property in every district, and in some localities a very considerable portion thereof, is transferred from local to state assessors; and this transfer would seem to be as unwarranted as whs the transfer attempted by the statute of 1867, which the Raymond Case condemned. It would seem that such decision "absolutely dominates" the case before us, and should control our disposition of the same. And so it does, even in the judgment of the learned jurist whose decision as referee was adopted by the court at special term, and whose opinion is now before us, were it not that he sees a distinction in the fact that the amount of property transferred from local to state assessment is in every instance very small, as compared with the whole amount of property taxed, and in some localities does not amount to anything. All of the principles decided «in the Raymond Case he seems to adopt, but he sustains the act before us upon the theory that it does not substantially interfere with the home rule principle, which it is the purpose of this section of the constitution 'to protect.. The argument is that it does not take away from the local assessors enough of their functions to operate as a substantial invasion of the right of home rule in any locality, and that therefore it is not a violation of the provisions of that section. As illustrating and sustaining this claim, he cites many cases in which acts of the legislature have been sustained that to some extent transferred from local to state officers certain duties which the local officers might, within the line of their duties, have performed. But in no one of them do I find that the act was sustained upon the ground upon which the referee would sustain this act.
In the Draper Case, 15 N. Y. 532, which is one of the earliest cases to adjudicate upon this section, the validity of a law was in question which created a new metropolitan police district from the city of New York and three adjacent counties, and which provided for the appointment by state officers of the commissioners therein, and abolished the existing police departments of the several municipalities within such district. That case sustained the act on the ground that the state liad authority to' create new civil divisions for police purposes, and to administer through its own officers the duties and regulations prescribed for the same. It distinctly held that, had the act applied to the city of New York alone, it could not have been sustained, but it denied that the constitution assumed that the subject of police was localized in the several cities and counties of the state. It held that:
"As a political society, the state has an interest in the repression of disorder and the maintenance of peace and security in every locality within its limits; and if, from exceptional causes, the public good requires that legislation, either permanent or temporary, be directed toward any particular locality, whether consisting of one county or of several counties,, it is within the discretion of the legislature to apply such legislation as, in its judgment, the exigency of the ease may require, and it is the sole judge of the existence of such causes."
Hence it treated the authority of the state upon the subject of police as paramount over that of the localities, and substantially held that for such reason no exclusively local function had been interfered with. As to such functions there was in fact no right of home rule to be preserved to the localities. And this is the principle which pervades and controls all the cases .relied upon by the court below. In. the Capital Police Case, 36 N. Y. 285, the act was held good upon the same principle, while in the Albertson Case, 55 N. Y. 50, the act was condemned because it was held to apply to the city of Troy only. So in the case of Rathbone v. Wirth, 150 N. Y. 459, 45 N. E. 15, 34 L. R. A. 408, the act concededly dealt with the subject of police for the city of Albany, merely, and a very slight interference with its power of local appointment was condemned. Upon the same principle, statutes concerning excise (Board v. Barrie, 34 N. Y. 657) and the preservation of the public health (Board v. Heister, 37 N. Y. 661) were sustained. So those authorizing the construction of public parks, avenues, and even a courthouse, by commissioners named by the state, have also been sustained, even though such construction was within the scope of. the functions of local officers. Astor's Case, 62 N. Y. 567; McDonald's Case, 69 N. Y. 362; Cheritree's Case, 6 Thomp. & C. 473; Hanlon's Case, 57 Barb. 383. But the foundation of each decision has been that the state had a paramount right to direct the work to be done, and hence could do it through its own instrumentalities. This is especially made clear by the reasoning of the opinion in the Oneida Courthouse Case, 170 N. Y. 108, .62 N. E. 1092.
My analysis of these cases is made only for the purpose of ascertaining how far they sustain the principle upon which the court below has decided this case. Whatever criticism has been or may be made of any of them is quite unimportant to this case, so long as it is apparent that in neither is the decision placed upon the ground that the infringement complained of was not sufficient to substantially imperil the principle of home rule. In many of them the functions of the local officer were entirely transferred, and in each of them the controlling principle has been that the act of the legislature did not invade any right or function that was exclusively local in its character. In each instance it was held or assumed'that the state had the paramount right to control the subject affected by the act, and hence that there was no invasion of local functions. As is said in the very excellent and scholarly brief submitted by the appellant's counsel on this question, it has been the nature of the power sought to be conferred upon the state officers that has controlled the decisions of the court. Whenever the courts were of the opinion that the act did not interfere with any functions that were exclusively local, then the act was sustained, even though it wholly abolished the local office, and transferred its functions to a state or department officer. But whenever the functions affected by the act were exclusively local, — whenever they did not come within the category of those over which it has always been recognized that the state, for the benefit of the state at large, has the paramount control,— then any transfer whatever of such local functions has not been permitted. And therein lies the clear distinction between the Raymond Case and those above cited. It is practically conceded by the referee that the subject of assessment of local property for local taxation is not a subject over which the state has paramount authority. As stated by him:
"The assessment of property for the purposes of taxation has always In this state been a function of local officers elected or appointed in the locality where they discharged their duties, and this system of assessment is intrenched in the constitution to secure to the people the home rule to which they had always been accustomed, and of which the people of our race have always been tenacious."
Therefore, as against the position taken by the court below, no argument is needed to establish that proposition:
A broader and bolder position, however, was taken upon the argument of this appeal. It was there said that no authority can be found for the claim that the assessment of property for local taxation is a function exclusively appertaining to local officers, and that the state has the same power to take from a local officer his duties, and transfer them to a state officer, as it had to take from the police commissioners of the city of New York their duties, and transfer them to officers of a department' of the state. In short, that its power over the subject of assessment is as paramount as is its power over all the several subjects referred to in the cases above cited, and that,, while the constitution prohibits the state from filling a local office which at the time of its adoption was filled by election or appointment by local authorities, yet it does not prohibit it from abolishing such local office, and transferring the duties of that office to an. officer of the state at large; that it may take to itself the perform anee of any or all of the functions of the local office, but it may not name the local officer to perform' them; and, so far as the question now before us is concerned, this is upon the theory that the state possesses the absolute power to tax, and hence it may take to itself the assessing of property, which is but an incident to the power of taxation.'. Evidently this theory utterly annihilates constitutional protection to the principle of home rule for local municipalities, and leaves very little importance or effect to the section in question. It is at variance with many decisions of the courts construing this section, and is approved by none. In the recent decision in this court of the Brenner Case, 67 App. Div. 381, 73 N. Y. Supp. 692, it was said:
"It must be regarded as well settled that the purpose of the constitutional provision in question is to secure to localities the fundamental right of self-government; that it protects all official duties existing at the time of its adoption, vested in local officers, and inhibits the transference of such duties to officers not elected by the electors of the locality or appointed by local authorities; that it is not the officer, but the office, — the existing duties and functions, — to which the protection is extended, and which cannot be transferred to an officer elected or appointed other than in the prescribed manner."
And this case was affirmed in the court of appeals. 170 N. Y. 185, 63 N. E. 133.
Moreover, the Raymond Case, above cited, is a direct authority against such view. As shown above, it declares that the plain purpose of the section was to preserve to localities the control of the official functions of which they were possessed at the time it was passed, and that "any other construction would render the section in question, when applied to the cities of the state, substantially nugatory." Undoubtedly at that time assessors of the localities were the only ones whose duty it was to assess property for local taxation. If the power to make such assessments may be now transferred to a state officer, the control of the localities over that subject is as much taken away as if it were transferred to a local officer named by the state, and thus the purpose of that section is evaded. Clearly, the Raymond Case proceeds upon the theory that the duty of assessing local property for the purpose of local taxation was exclusively a function of the local assessors, and hence is authority for the claim that such duties may not be transferred by the legislature to any officer whatever who is not chosen by the localities themselves.
We are left, then, with the single question whether the views of the court below can be sustained upon principle only. Its argument Is that the amount of property, the assessment of which is transferred from local to state assessors by this act, is so inconsiderable a portion of the whole that, as a matter of fact, neither of the localities is "in any 'material' manner deprived of local self-government"; that therefore their home rule rights are not "substantially invaded, and hence it does not at all infringe against the constitutional prohibition. But the question is not whether such transfer affects their home rule rights or their local self-government "materially" or "substantially," or, as I understand the argument, to an extent sufficient to do them any harm, but whether it does or does not amount to a direct and actual invasion of such rights. Beyond controversy, this act takes away from the local assessors the function of assessing a certain kind of property, and transfers it to the state board of tax commissioners, and to this extent makes such board perform the functions of a local officer; and, if we sustain this act, we must sustain their authority to do that very thing. But this is the very thing that the constitution says they may not do. Officers appointed by state authority may not be authorized to perform the functions of an office exclusively local. Clearly, the invasion which we would thus sustain, if repeated, would ultimately transfer the whole function of assessment from local to state officers; and so it would seem that the first invasion is as much a violation of the constitutional prohibition as would be the one that transferred the last remnant of property remaining to the local assessor. I cannot agree that the principle of home rule is not endangered, because the courts may tell the legislature that it has intruded upon it far enough. Such is not the constitutional scheme for its protection. That instrument declares what the legislature may not do. They may not transfer the functions of a local office to state officers. If an act of the legislature attempts to do that, presumptively it is a dangerous invasion of the home rule principle. Certainly it is a prohibited one. It is a question of authority on the part of the legislature. Concededly, it would not be authorized to so transfer, by other acts, many other specified kinds of property. Concededly, the time would come when, to save to localities their home rule rights, the courts must hold an act to be unconstitutional that in itself attempts, to do no more than this act does. In my judgment, both acts would be equally unauthorized.
It is suggested that so much of the "special franchise" as consists of the mere right to operate the tangible property in streets and public places has never heretofore been the subject of taxation, and that as to such new property the act in question, by depriving the local officers of the right to assess it, takes no right from them that they ever had before, and hence the principle of home rule is not involved. But it has been the duty of local assessors, ever since the office existed, to assess all property in their district that was liable to taxation, and they were the sole and only officers upon whom such duty was imposed. The legislature from time to time, as new species of property have come into existence, has imposed the burden of taxation upon them; yet it did not need an act of the legislature to enable the assessors to assess such new property. That duty devolved upon them as soon as the property was declared taxable, by virtue of the long-existing and well-recognized function of their office; and it is this very duty of assessing all the property in a locality upon which the legislature shall impose the obligation of paying a local tax that the localities insist should be exercised by officers chosen by themselves. The functions of the office are neither enlarged by an addition of property to the tax list, nor are they diminished by a removal of property from that list. Undoubtedly the legislature has the power to do either, but the function of the assessors' office remains the same. The right and the duty of the assessors to assess whatever property in their district the legislature shall declare taxable for local purposes is the long-existing and assured function of that office which is sought to be preserved. Therefore, when the leg islature deemed it wise to add to the taxable list' the so-called special franchise, the duty of assessing it devolved at once upon the local assessors. Its creation at once brought it within the scope of their official duties. By virtue of the functions of such office it became-the duty of the assessors to assess it. It is true that the assessors-have never heretofore had the opportunity of assessing such property. It has never been made taxable, and so brought within the scope of their duties; but their right and duty to assess, now that it has-been made taxable, has always existed, and by appointing another officer to perform that duty the act in question directly invades the functions of such office, and attacks the principle of home rule. Moreover, a considerable portion of the "special franchise" consists of tangible property that has long been assessed by the local officers. In the city of New York alone it amounts-to something over $76,000,000. All such property the law in question withdraws from the assessment by local assessors. It is argued that, such property is a mere adjunct to the "franchise or right to use it," and that, as the duty of assessing such right may be taken away, the duty of assessing its adjuncts must go with it. As said above, this is a question of power in the legislature, and I am unable to understand how that body gets the power to withdraw the tangible property from local assessment by merely requiring it to be assessed with the intangible right to use it. It cannot do indirectly what it may not do- directly. It has no more power to add it to intangible property, and so withdraw it from local assessment, than it has the power to withdraw it directly from such assessment.
I am forced to the conclusion that so much of the act in question as provides for the assessment of a special franchise by the state board of tax commissioners is unconstitutional and void. I am not unmindful of the importance of this question. The great interest which the taxpayers of the state take in this effort to subject to the burden of taxation a very large amount of property which undoubtedly is of immense value to its owners,' and the disappointment which will naturally accrue through its failure to them, and to those legislators who evidently adopted this plan as the one best calculated to protect alike the owner and the public, are fully appreciated by me. But this court does not enter as a pioneer upon the consideration of this question. Every principle involved in it has been settled by the court of appeals, and we may do no more than recognize and enforce such principles in their application to this case. As stated above, in my judgment the decision in the Raymond Case absolutely dominates this case.
CHASE, J., concurs.