Case Name: The People of the State of New York ex rel. A. G. Hyde & Sons, Respondent, v. Frank A. O'Donnel and Others, as Commissioners of Taxes and Assessments of the City of New York, Appellants
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1906-12-07
Citations: 116 A.D. 161
Docket Number: 
Parties: The People of the State of New York ex rel. A. G. Hyde & Sons, Respondent, v. Frank A. O’Donnel and Others, as Commissioners of Taxes and Assessments of the City of New York, Appellants.
Judges: 
Reporter: Appellate Division Reports
Volume: 116
Pages: 161–165

Head Matter:
The People of the State of New York ex rel. A. G. Hyde & Sons, Respondent, v. Frank A. O’Donnel and Others, as Commissioners of Taxes and Assessments of the City of New York, Appellants.
First Department,
December 7, 1906.
Tax—goods in other States to be manufactured for domestic corporation.
A domestic corporation owning raw material in the process of manufacture in foreign States is not taxable thereon on the theory that the material when finished may be brought into this State for sale. The right to tax such property depends upon its situs on the second Monday in January.
Clarke and Scott, JJ., dissented, with opinion.
Appeal by the defendants, Frank A. O’Donnel' and others, as commissioners, etc., from a final order of the Supreme Court, made at the New York Special Term and entered' in the office of the clerk of the county of New York on the 16th day of March, 1906, sustaining a writ of certiorari and reducing an assessment.theretofore made against the relator.
Curtis A. Peters, for the appellants.
James J. Allen, for the respondent.

Opinion:
Patterson, J.:
The relator, a domestic corporation, was assessed for th,e purposes of taxation for'the year 1904 at the sum of $940,000. That amount was made up by including within it the value of certain tangible personal property situate outside of the State of New York, but which the tax commissioners determined was taxable within the State. This personal property was valued at $770,000, and consisted of raw material at certain mills in other States in which it had been purchased, or oh finishing mills in other States and raw material in process of manufacture at other mills, also located outside of the State of New York. It was the custom of the relator to buy such raw material, to keep it at the place at which it was purchased outside of the State of New York, until it was sent to finishing mills, also Outside of this State, and where it was converted into finished fabrics. Five-sixths of those fabrics were brought to Ñew York for sale and one-sixth was sent to Chicago. On the first Monday of January, 1904, none of this material was (and never had been) in the State of New York. Its value was included by the commissioners in their.assessment upon the theory that it was taxable, because jn accordance with the custom of the relator it would be brought within this State to be sold. On a writ of certiorari procured to' review this assessment, the court. at Special Term reduced it by the sum of $770,000, and decided that the property mentioned as being situated outside of the State of New York was not taxable, from which decision the commissioners appeal.
Under the ¡Revised Statutes this personal property would not have been taxable. ' (People ex rel. Hoyt v. Comrs. of Taxes, 23 N. Y. 224.) By the Tax ¡Law of 1896 it is provided that all real property within this State and all personal property situated or owned within this State is- taxable, unless exempt from taxation by law. Construction was given to that provision by this court, in the case of People ex rel. Orinoka Mills v. Barker (84 App. Div. 469), and it was therein held that certain raw material and manufactured goods owned by the relator,, but situate at mills in Pennsylvania were not taxable here, and in effect that the ruling in the Hoyt case still prevailed. The Orinoka Mills case must be regarded as controlling here, unless it can be held that the relator's goods above mentioned were only temporarily without the State., But those goods and the raw material never were within this State. The right to tax them arises under the statute only and the test of the right to tax them is the situs of the property on the second ¡Monday of January, 1904. The fact of dominion of the State over the subject of taxation at the time the tax is imposed is declared to be the test in Matter of Swift (137 N. Y. 85). What was to become of the property after that date is irrelevant. The relator might or might not bring it within the State and the mere presumption arising from its customary dealing with its property is not a determinate factor in the consideration 'of its liability to the imposition of a tax on the second, Monday of January, 1904. The case of the Orinoka Mills is binding authority, and what was there decided requires an affirmance of the order appealed from.
The order should be affirmed, with costs and disbursements.
Ingeaham and Latjghlin, JJ., concurred ; Clarke and Scott, JJ., dissented.